воок II. Of the Nature, Accumulation, and Employment of Stock. INTRODUCTION. N that rude ftate of society in which there is Introduct. no division of labour, in which exchanges are feldom made, and in which every man provides every thing for himself, it is not neceffary that any stock should be accumulated or ftored up beforehand, in order to carry on the business of the fociety. Every man endeavours to fupply by his own industry his own occafional wants as they Occur. When he is hungry, he goes to the forest to hunt; when his coat is worn out, he clothes himself with the skin of the first large animal he kills and when his hut begins to go to ruin, he repairs it, as well as he can, with the trees and the turf that are nearest it. BUT when the divifion of labour has once been thoroughly introduced, the produce of a man's own labour can fupply but a very small part of his occafional wants. The far greater part of them are fupplied by the produce of other mens labour, which he purchases with the produce, or, what is the fame thing, with the price of the produce of his own. But this purchase Dd 4 cannot BOOK cannot be made till fuch time as the produce of I. his own labour has not only been completed, but fold. A stock of goods of different kinds, therefore, must be ftored up fomewhere sufficient to maintain him, and to fupply him with the materials and tools of his work, till fuch time, at leaft, as both thefe events can be brought about. A weaver cannot apply himself entirely to his peculiar bufinefs, unless there is beforehand ftored up fomewhere, either in his own poffeffion or in that of fome other perfon, a stock fufficient to maintain him, and to fupply him with the materials and tools of his work, till he has not only completed, but fold his web. This accumulation muft, evidently, be previous to his applying his industry for fo long a time to fuch a peculiar bufinefs. As the accumulation of stock muft, in the nature of things, be previous to the divifion of labour, fo labour can be more and more fubdivided in proportion only as ftock is previously more and more accumulated. The quantity of materials which the fame number of people can work up, increases in a great proportion as labour comes to be more and more fubdivided; and as the operations of each workman are gradually reduced to a greater degree of fimplicity, a variety of new machines come to be invented for facilitating and abridging thofe operations. As the divifion of labour advances, therefore, in order to give conftant employment to an equal number of workmen, an equal ftock of provifions, and a greater stock of materials and tools than than what would have been neceffary in a ruder Introdu&t. ftate of things, must be accumulated beforehand. But the number of workmen in every branch of business generally increases with the di̟vifion of labour in that branch, or rather it is the increase of their number which enables them to clafs and fubdivide themselves in this manner. As the accumulation of stock is previously neceffary for carrying on this great improvement in the productive powers of labour, fo that accumulation naturally leads to this improvement. The person who employs his stock in maintaining labour, neceffarily wishes to employ it in fuch a manner as to produce as great a quantity of work as poffible. He endeavours, therefore, both to make among his workmen the moft proper diftribution of employment, and to furnish them with the best machines which he can either invent or afford to purchase. His abilities in both thefe refpects are generally in proportion to the extent of his ftock, or to the number of people whom it can employ. The quantity of industry, therefore, not only increases in every country with the increase of the stock which employs it, but, in confequence of that increase, the fame quantity of industry produces a much greater quantity of work. SUCH are in general the effects of the increase of ftock upon industry and its productive powers. IN the following book I have endeavoured to explain the nature of ftock, the effects of its accumulation into capitals of different kinds, and the effects of the different employments of thofe BOOK thofe capitals. This book is divided into five Π. chapters. In the first chapter, I have endea voured to fhow what are the different parts or branches into which the ftock, either of an individual, or of a great society, naturally divides itfelf. In the fecond, I have endeavoured to explain the nature and operation of money confidered as a particular branch of the general ftock of the fociety. The ftock which is accumulated into a capital, may either be employed by the person to whom it belongs, or it may be lent to fome other perfon. In the third and fourth chapters, I have endeavoured to examine the manner in which it operates in both these fituations. The fifth and laft chapter treats of the different effects which the different employments of capital immediately produce upon the quantity both of national industry, and of the annual produce of land and labour. CHAP. J. Of the Divifion of Stock. HEN the ftock which a man poffeffes is WF no more than fufficient to maintain him for a few days or a few weeks, he feldom thinks of deriving any revenue from it. He confumes it as fparingly as he can, and endeavours by his labour to acquire fomething which may supply its place before it be confumed altogether. His revenue I. revenue is, in this cafe, derived from his labour CHA P. only. This is the state of the greater part of the labouring poor in all countries. 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 distinguished into two parts. That part which, he expects, is to afford him this revenue, is called his capital. The other is that which fupplies his immediate confumption; and which confifts either, firft, 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 ftock 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 raising, manufacturing, or purchasing 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 |