I II. Thus if a guinea be the weekly penfion of a c HAP. particular perfon, he can in the courfe of the week purchase with it a certain quantity of fubfiftence, conveniences, and amufements. In proportion as this quantity is great or small, fo are his real riches, his real weekly revenue. His weekly revenue is certainly not equal both to the guinea, and to what can be purchased with it, but only to one or other of thofe two equal values; and to the latter more properly than to the former, to the guinea's worth rather than to the guinea. If the penfion of fuch a perfon was paid to him, not in gold, but in a weekly bill for a guinea, his revenue furely would not fo properly confift in the piece of paper, as in what he could get for it. A guinea may be confidered as a bill for a certain quantity of neceffaries and conveniencies upon all the tradefmen in the neighbourhood. The revenue of the perfon to whom it is paid, does not fo properly confift in the piece of gold, as in what he can get for it, or in what he can exchange it for. If it could be exchanged for nothing, it would, like a bill upon a bankrupt, be of no more value than the most ufelefs piece of paper. Though the weekly or yearly revenue of all the different inhabitants of any country, in the fame manner, may be, and in reality frequently is paid to them in money, their real riches, however, the real weekly or yearly revenue of all of them taken together, muft always be great or fmall in proportion to the quantity of confumable 4 II. BOOK fumable goods which they can all of them purchafe with this money. The whole revenue of all of them taken together is evidently not equal to both the money and the confumable goods; but only to one or other of those two values, and to the latter more properly than to the former. Though we frequently, therefore, exprefs a perfon's revenue by the metal pieces which are annually paid to him, it is because the amount of thofe pieces regulates the extent of his power of purchafing, or the value of the goods which he can annually afford to confume. We still confider his revenue as confifting in this power of purchafing or confuming, and not in the pieces which convey it. But if this is fufficiently evident even with regard to an individual, it is still more fo with regard to a fociety. The amount of the metal pieces which are annually paid to an individual, is often precisely equal to his revenue, and is upon that account the shortest and best expreffion of its value. But the amount of the metal pieces which circulate in a fociety, can never be equal to the revenue of all its members. As the fame guinea which pays the weekly penfion of one man to-day, may pay that of another tomorrow, and that of a third the day thereafter, the amount of the metal pieces which annually circulate in any country, muft always be of much lefs value than the whole money penfions annually paid with them. But the power of purchafing, or the goods which can fucceffively be bought with the whole of those money penfions as they are fucceffively paid, muft always be II. be precifely of the fame value with thofe pen- CHA P. fions; as muft likewife be the revenue of the different perfons to whom they are paid. That revenue, therefore, cannot confift in thofe metal pieces, of which the amount is fo much inferior to its value, but in the power of purchafing, in the goods which can fucceffively be bought with them as they circulate from hand to hand. Money, therefore, the great wheel of circulation, the great inftrument of commerce, like all other inftruments of trade, though it makes a part, and a very valuable part, of the capital, makes no part of the revenue of the fociety to which it belongs; and though the metal pieces of which it is compofed, in the courfe of their annual circulation, diftribute to every man the revenue which properly belongs to him, they make themselves no part of that revenue. Thirdly, and laftly, the machines and inftruments of trade, &c. which compofe the fixed capital, bear this further refemblance to that part of the circulating capital which confifts in money; that as every faving in the expence of erecting and fupporting thofe machines, which does not diminish the productive powers of labour, is an improvement of the neat revenue of the fociety; fo every faving in the expence of collecting and fupporting that part of the circulating capital which confifts in money, is an improvement of exactly the fame kind. It is fufficiently obvious, and it has partly too been explained already, in what manner every faving in the expence of fupporting the fixed capital VOL. II. F F II. BOOK capital is an improvement of the neat revenue of the fociety. The whole capital of the undertaker of every work is neceffarily divided between his fixed and his circulating capital. While his whole capital remains the fame, the fmaller the one part, the greater muft neceffarily be the other. It is the circulating capital which furnishes the materials and wages of labour, and puts industry into motion. Every faving, therefore, in the expence of maintaining the fixed capital, which does not diminish the productive powers of labour, muft increase the fund which puts industry into motion, and confequently the annual produce of land and labour, the real revenue of every fociety. The fubftitution of paper in the room of gold and filver money, replaces a very expenfive inftrument of commerce with one much less coftly, and fometimes equally convenient. Circulation comes to be carried on by a new wheel, which it cofts lefs both to erect and to maintain than the old one. But in what manner this operation is performed, and in what manner it tends to increase either the grofs or the neat revenue of the fociety, is not altogether fo obvious, and may therefore require fome further explication. There are feveral different forts of paper money; but the circulating notes of banks and bankers are the fpecies which is best known, and which feems beft adapted for this purpose. When the people of any particular country have fuch confidence in the fortune, probity, and prudence of a particular banker, as to be II. lieve that he is always ready to pay upon demand CHAP. fuch of his promiflory notes as are likely to be at any time presented to him; thofe notes come to have the fame currency as gold and filver money, from the confidence that fuch money can at any time be had for them. A particular banker lends among his cuftomers his own promiffory notes, to the extent, we fhall fuppofe, of a hundred thousand pounds. As thofe notes ferve all the purposes of money, his debtors pay him the fame intereft as if he had lent them fo much money. This intereft is the fource of his gain. Though fome of thofe notes are continually coming back upon him for pay ment, part of them continue to circulate for months and years together. Though he has generally in circulation, therefore, notes to the extent of a hundred thoufand pounds, twenty thousand pounds in gold and filver may, frequently, be a fufficient provifion for answering occafional demands. By this operation, therefore, twenty thousand pounds in gold and filver perform all the funétions which a hundred thousand could otherwise have performed. The fame exchanges may be made, the fame quantity of confumable goods may be circulated and diftributed to their proper confumers, by means of his promiffory notes, to the value of a hundred thoufand pounds, as by an equal value of gold and filver money. Eighty thousand pounds of gold and filver, therefore, can, in this manner, be fpared from the circulation of the country; and if different operations of the fame kind fhould, FF 2 |