try and state of society, can only be carried to their full extent, where there is a great power of exchanging, or an extensive market. There are an infinite variety of employments which cannot be separately carried on out of the precincts of a large city; and, in all cases, the division becomes more perfect, according as the demand for the produce is extended. It is stated by Dr Smith that ten labourers employed in different departments in a pin manufactory can produce 48,000 pins a day; but it is evident that if the demand was not sufficiently extensive to take off this quantity, ten men could not be constantly employed in the pin-making business; and the division of employments could not, of course, be carried so far. The same principle holds universally. A cotton mill could not be constructed in a small country which had no intercourse with its neigbours. The demand and competition of Europe and America have been necessary to carry the manufactures of Glasgow, Manchester, and Birmingham, to their present state of improve

ment.

The effect of the division of labour in increasing the quantity and perfection of the products of industry had been noticed by several of the writers who preceded Dr Smith, and especially by Mr Harris and M. Turgot. But neither of these writers did what Dr Smith has done. None of them has fully traced its operation, or shown that the power of engaging in different employments depends on the

power of exchanging; and that, consequently, the advantages derived from the division of labour are necessarily dependent upon, and regulated by, the extent of the market. This is a principle of very great importance, and by establishing it Dr Smith shed a new light on the whole science, and laid the foundation of many important practical conclusions. "Présentée de cette manière," says M. Storch, "l'idée de la division du travail étoit absolument neuve ; et l'effet qu'elle a fait sur les contemporains de Smith, prouve bien qu'elle l'etait réellement pour eux. Telle qu'elle se trouve indiquée dans les passages que je viens de citer, elle n'a fait aucune impression. Developpée par Smith, cette idée a d'abord saisi tous ses lecteurs; tous en ont senti la verité et l'importance; et cela sufit pour lui en assurer tout l'honneur, lors même que son genie eut été guidé par les indications de ses devanciers." *

III. ACCUMULATION AND EMPLOYMENT OF CAPITAL.-The capital of a country may be defined to be that portion of the produce of industry existing in it, which can be made DIRECTLY available, either to the support of human existence, or to the facili tating of production. This definition differs from that given by Dr Smith, and which has been adopted by most other economists. The whole produce of industry belonging to a country is said to form its stock; and its capital is supposed to consist of that

*Tome IV. p. 9.

portion only of its stock which is employed in the view of producing some species of commodities: The other portion of the stock of a country, or that which is employed to maintain its inhabitants, without any immediate view to production, has been denominated its revenue, and is not supposed to contribute any thing to the increase of its wealth. These distinctions seem to rest on no good foundation. Portions of stock employed without any immediate view to production are often by far the most productive. The stock, for example, that Arkwright and Watt employed in their own consumption, and without which they could not have subsisted, was laid out as revenue; and yet it is quite certain that it contributed infinitely more to increase their own wealth, as well as that of the country, than any equal quantity of stock expended on the artisans in their service. It is always extremely difficult to say when any portion of stock is, or is not, productively employed; and any definition of capital which involves the determination of this point, can serve only to embarrass and obscure a subject that is otherwise abundantly simple. In our view of the matter, it is enough to constitute an article capital, if it can either directly contribute to the support of man, or assist him in appropriating or producing commodities. It may not, it is true, be employed for either of these purposes; but the question with respect to the mode of employing an article ought certainly to be held to be, what it obviously is, perfectly distinct from the question, whether that article is capital. For, any

thing that we can a priori know to the contrary, a horse yoked to a gentleman's coach may be just as productively employed as if he were yoked to a brewer's dray; though it is quite plain that, whatever difference may really obtain in the two cases, the identity of the horse is not affected-he is equally possessed, in the one case as in the other, of the capacity to assist in production; and, so long as he possesses that capacity, he ought to be viewed, independently of all other considerations, as a portion of the capital of the country.

It is evident, on the slightest reflection, that the possession and employment of capital are indispensa ble to the successful prosecution of almost every species of industry. Without it no sort of labour could be undertaken which did not promise an almost immediate return, and which might not be carried on by the hand only. Capital comprises all the food and other articles applicable to the subsistence of man, and it also comprises all the lower animals, and all the instruments and machines, which either are or may be made to assist in production. The former species has been denominated circulating, the latter fixed capital. Now, it is quite obvious, that it is by the amount of the circulating capital of a country, or of the food and other articles applicable to the subsistence of man, in its possession at any given period, that its power to support population must be measur ed; and it is also obvious, that the productiveness of its industry must very much depend on the efficacy of the fixed capital, or of the tools and engines used in facilitating production. The possession and employ

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ment of both these descriptions of capital are equally essential; and it is only by their conjoined operation that wealth can be largely produced, and universally diffused. An agriculturist might have an ample supply of carts and ploughs, of oxen and horses, and generally of all the instruments and animals used in his department of industry, but if he were destitute of circulating capital, or of food and clothes, he would not be able to avail himself of their assistance, and instead of tilling the ground, would have to resort immediately to some species of appropriative industry: And, on the other hand, supposing the agriculturist to be abundantly supplied with provisions, what could he do without the assistance of fixed capital or tools? What could the most skilful husbandman perform if he were deprived of his spade and his plough ?--a weaver if he were deprived of his loom ?-a carpenter if he were deprived of his saw, his hatchet, and his planes?

The division of labour is a consequence of the previous accumulation of capital. Before labour can be divided, "a stock of goods of different kinds must be stored up somewhere, sufficient to maintain the labourer, and to supply him with the materials and tools for carrying on his work. A weaver, for example, could not apply himself entirely to his peculiar business, unless there was beforehand stored up somewhere, either in his own possession, or in that of some other person, a stock sufficient for his maintenance, and for supplying him with the materials and implements required to carry on his work, till he has not