II. BOOK 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 fuch a capital. The idlenefs of the greater part of the people who are maintained by the expence of revenue, corrupts, it is probable, the industry of those who ought to be maintained by the employment of capital, and renders it lefs 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 affembled in it, when it ceased to be the neceffary refidence of the principal nobility and gentry of Scotland, it became a city of fome trade and industry. It ftill continues, however, to be the refidence of the principal courts of justice in Scotland, of the boards of customs and excife, &c. A confiderable revenue, therefore, ftill continues to be fpent 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 fometimes been obferved, after having made confiderable progrefs in manufactures, have become idle and poor, in confequence of a great lord's having taken up his refidence in their neighbourhood. THE proportion between capital and revenue, therefore, feems every-where to regulate the proportion between industry and idleness. Whereever capital predominates, induftry prevails: wherever revenue, idleness. Every increase or diminution I III. diminution of capital, therefore, naturally tends CHAP. to increase or diminish the real quantity of industry, the number of productive hands, and confequently 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 parfimony, and diminished by prodigality and misconduct. WHATEVER a perfon faves from his revenue he adds to his capital, and either employs it himfelf in maintaining an additional number of productive hands, or enables fome other perfon to do fo, by lending it to him for an intereft, that is, for a fhare of the profits. As the capital of an individual can be increased only by what he faves from his annual revenue or his annual gains, fo the capital of a fociety, which is the fame with that of all the individuals who compofe it, can be increased only in the fame man ner. PARSIMONY, and not industry, is the immediate cause of the increase of capital. Induftry, indeed, provides the subject which parfimony accumulates. But whatever industry might acquire, if parfimony did not fave and store up, the capital would never be the greater. PARSIMONY, by increafing the fund which is deftined for the maintenance of productive hands, tends to increase the number of those hands whofe labour adds to the value of the fubject upon which it is beftowed. It tends therefore to increase the exchangeable value of the annual pro BOOK duce of the land and labour of the country. It II. puts into motion an additional quantity of induftry, which gives an additional value to the annual produce. WHAT is annually faved is as regularly confumed as what is annually spent, and nearly in the fame time too; but it is confumed by a different fet of people. That portion of his revenue which a rich man annually spends, is in moft cafes confumed by idle guests, and menial fervants, who leave nothing behind them in return for their consumption. That portion which he annually faves, as for the fake of the profit it is immediately employed as a capital, is confumed in the fame manner, and nearly in the fame time too, but by a different fet of people, by labourers, manufacturers, and artificers, who re-produce with a profit the value of their annual confumption. His revenue, we fhall fuppofe, is paid him in money. Had he spent the whole, the food, clothing, and lodging, which the whole could have purchased, would have been diftributed among the former fet of people. By faving a part of it, as that part is for the fake of the profit immediately employed as a capital either by himself or by fome other perfon, the food, clothing, and lodging, which may be purchased with it, are neceffarily referved for the latter. The confumption is the fame, but the confumers are different. By what a frugal man annually faves, he not only affords maintenance to an additional number of productive hands, for that or the enfuing year, 1 year, but, like the founder of a public work- CHAP. 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 pofitive law, by any truft-right or deed of mortmain. It is always guarded, however, by a very powerful principle, the plain and evident intereft of every individual to whom any share of it fhall ever belong. No part of it can ever afterwards be employed to maintain any but productive hands, without an evident lofs to the person who thus perverts it from its proper deftination. THE prodigal perverts it in this manner. By not confining his expence within his income, he encroaches upon his capital. Like him who perverts the revenues of fome pious foundation to profane purposes, he pays the wages of idlenefs with thofe funds which the frugality of his forefathers had, as it were, confecrated to the maintenance of industry. By diminishing the funds deftined for the employment of productive labour, he neceffarily diminishes, fo far as it depends upon him, the quantity of that labour which adds a value to the fubject 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 fome was not compenfated by the frugality of others, the conduct of every prodigal, by feeding the idle with the bread of the industrious, tends not only BOOK to beggar himself, but to impoverish his coun II. try. THOUGH the expence 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 fociety would still be the fame. 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 ftill be fome diminution in what would otherwife have been the value of the annual produce of the land and labour of the country. THIS expence, it may be faid indeed, not being in foreign goods, and not occafioning any exportation of gold and filver, the fame quantity of money would remain in the country as before. But if the quantity of food and clothing, which were thus confumed by unproductive, had been diftributed among productive hands, they would have reproduced, together with a profit, the full value of their confumption. The fame quantity of money would in this cafe equally have remained in the country, and there would befides have been a reproduction of an equal value of confumable goods. There would have been two values inftead of one. THE fame quantity of money, befides, cannot long remain in any country in which the value of the annual produce diminishes. The fole use of money is to circulate confumable goods. By means of it, provifions, materials, and finished work, |