The Wealth of Nations

F THE ACCUMULATION OF CAPITAL, OR OF
PRODUCTIVE AND UNPRODUCTIVE LABOUR.

There is one sort of labour which adds to the value of the subject upon
which it is bestowed; there is another which has no such effect. The
former as it produces a value, may be called productive, the latter,
unproductive labour. {Some French authors of great learning and ingenuity
have used those words in a different sense. In the last chapter of the
fourth book, I shall endeavour to shew that their sense is an improper
one.} Thus the labour of a manufacturer adds generally to the value of the
materials which he works upon, that of his own maintenance, and of his
master’s profit. The labour of a menial servant, on the contrary, adds to
the value of nothing. Though the manufacturer has his wages advanced to
him by his master, he in reality costs him no expense, the value of those
wages being generally restored, together with a profit, in the improved
value of the subject upon which his labour is bestowed. But the
maintenance of a menial servant never is restored. A man grows rich by
employing a multitude of manufacturers; he grows poor by maintaining a
multitude or menial servants. The labour of the latter, however, has its
value, and deserves its reward as well as that of the former. But the
labour of the manufacturer fixes and realizes itself in some particular
subject or vendible commodity, which lasts for some time at least after
that labour is past. It is, as it were, a certain quantity of labour
stocked and stored up, to be employed, if necessary, upon some other
occasion. That subject, or, what is the same thing, the price of that
subject, can afterwards, if necessary, put into motion a quantity of
labour equal to that which had originally produced it. The labour of the
menial servant, on the contrary, does not fix or realize itself in any
particular subject or vendible commodity. His services generally perish in
the very instant of their performance, and seldom leave any trace of value
behind them, for which an equal quantity of service could afterwards be
procured.

The labour of some of the most respectable orders in the society is, like
that of menial servants, unproductive of any value, and does not fix or
realize itself in any permanent subject, or vendible commodity, which
endures after that labour is past, and for which an equal quantity of
labour could afterwards be procured. The sovereign, for example, with all
the officers both of justice and war who serve under him, the whole army
and navy, are unproductive labourers. They are the servants of the public,
and are maintained by a part of the annual produce of the industry of
other people. Their service, how honourable, how useful, or how necessary
soever, produces nothing for which an equal quantity of service can
afterwards be procured. The protection, security, and defence, of the
commonwealth, the effect of their labour this year, will not purchase its
protection, security, and defence, for the year to come. In the same class
must be ranked, some both of the gravest and most important, and some of
the most frivolous professions; churchmen, lawyers, physicians, men of
letters of all kinds; players, buffoons, musicians, opera-singers,
opera-dancers, etc. The labour of the meanest of these has a certain
value, regulated by the very same principles which regulate that of every
other sort of labour; and that of the noblest and most useful, produces
nothing which could afterwards purchase or procure an equal quantity of
labour. Like the declamation of the actor, the harangue of the orator, or
the tune of the musician, the work of all of them perishes in the very
instant of its production.

Both productive and unproductive labourers, and those who do not labour at
all, are all equally maintained by the annual produce of the land and
labour of the country. This produce, how great soever, can never be
infinite, but must have certain limits. According, therefore, as a smaller
or greater proportion of it is in any one year employed in maintaining
unproductive hands, the more in the one case, and the less in the other,
will remain for the productive, and the next year’s produce will be
greater or smaller accordingly; the whole annual produce, if we except the
spontaneous productions of the earth, being the effect of productive
labour.

Though the whole annual produce of the land and labour of every country is
no doubt ultimately destined for supplying the consumption of its
inhabitants, and for procuring a revenue to them; yet when it first comes
either from the ground, or from the hands of the productive labourers, it
naturally divides itself into two parts. One of them, and frequently the
largest, is, in the first place, destined for replacing a capital, or for
renewing the provisions, materials, and finished work, which had been
withdrawn from a capital; the other for constituting a revenue either to
the owner of this capital, as the profit of his stock, or to some other
person, as the rent of his land. Thus, of the produce of land, one part
replaces the capital of the farmer; the other pays his profit and the rent
of the landlord; and thus constitutes a revenue both to the owner of this
capital, as the profits of his stock, and to some other person as the rent
of his land. Of the produce of a great manufactory, in the same manner,
one part, and that always the largest, replaces the capital of the
undertaker of the work; the other pays his profit, and thus constitutes a
revenue to the owner of this capital.

That part of the annual produce of the land and labour of any country
which replaces a capital, never is immediately employed to maintain any
but productive hands. It pays the wages of productive labour only. That
which is immediately destined for constituting a revenue, either as profit
or as rent, may maintain indifferently either productive or unproductive
hands.

Whatever part of his stock a man employs as a capital, he always expects
it to be replaced to him with a profit. He employs it, therefore, in
maintaining productive hands only; and after having served in the function
of a capital to him, it constitutes a revenue to them. Whenever he employs
any part of it in maintaining unproductive hands of any kind, that part is
from that moment withdrawn from his capital, and placed in his stock
reserved for immediate consumption.

Unproductive labourers, and those who do not labour at all, are all
maintained by revenue; either, first, by that part of the annual produce
which is originally destined for constituting a revenue to some particular
persons, either as the rent of land, or as the profits of stock; or,
secondly, by that part which, though originally destined for replacing a
capital, and for maintaining productive labourers only, yet when it comes
into their hands, whatever part of it is over and above their necessary
subsistence, may be employed in maintaining indifferently either
productive or unproductive hands. Thus, not only the great landlord or the
rich merchant, but even the common workman, if his wages are considerable,
may maintain a menial servant; or he may sometimes go to a play or a
puppet-show, and so contribute his share towards maintaining one set of
unproductive labourers; or he may pay some taxes, and thus help to
maintain another set, more honourable and useful, indeed, but equally
unproductive. No part of the annual produce, however, which had been
originally destined to replace a capital, is ever directed towards
maintaining unproductive hands, till after it has put into motion its full
complement of productive labour, or all that it could put into motion in
the way in which it was employed. The workman must have earned his wages
by work done, before he can employ any part of them in this manner. That
part, too, is generally but a small one. It is his spare revenue only, of
which productive labourers have seldom a great deal. They generally have
some, however; and in the payment of taxes, the greatness of their number
may compensate, in some measure, the smallness of their contribution. The
rent of land and the profits of stock are everywhere, therefore, the
principal sources from which unproductive hands derive their subsistence.
These are the two sorts of revenue of which the owners have generally most
to spare. They might both maintain indifferently, either productive or
unproductive hands. They seem, however, to have some predilection for the
latter. The expense of a great lord feeds generally more idle than
industrious people. The rich merchant, though with his capital he
maintains industrious people only, yet by his expense, that is, by the
employment of his revenue, he feeds commonly the very same sort as the
great lord.

The proportion, therefore, between the productive and unproductive hands,
depends very much in every country upon the proportion between that part
of the annual produce, which, as soon as it comes either from the ground,
or from the hands of the productive labourers, is destined for replacing a
capital, and that which is destined for constituting a revenue, either as
rent or as profit. This proportion is very different in rich from what it
is in poor countries.

Thus, at present, in the opulent countries of Europe, a very large,
frequently the largest, portion of the produce of the land, is destined
for replacing the capital of the rich and independent farmer; the other
for paying his profits, and the rent of the landlord. But anciently,
during the prevalency of the feudal government, a very small portion of
the produce was sufficient to replace the capital employed in cultivation.
It consisted commonly in a few wretched cattle, maintained altogether by
the spontaneous produce of uncultivated land, and which might, therefore,
be considered as a part of that spontaneous produce. It generally, too,
belonged to the landlord, and was by him advanced to the occupiers of the
land. All the rest of the produce properly belonged to him too, either as
rent for his land, or as profit upon this paltry capital. The occupiers of
land were generally bond-men, whose persons and effects were equally his
property. Those who were not bond-men were tenants at will; and though the
rent which they paid was often nominally little more than a quit-rent, it
really amounted to the whole produce of the land. Their lord could at all
times command their labour in peace and their service in war. Though they
lived at a distance from his house, they were equally dependent upon him
as his retainers who lived in it. But the whole produce of the land
undoubtedly belongs to him, who can dispose of the labour and service of
all those whom it maintains. In the present state of Europe, the share of
the landlord seldom exceeds a third, sometimes not a fourth part of the
whole produce of the land. The rent of land, however, in all the improved
parts of the country, has been tripled and quadrupled since those ancient
times; and this third or fourth part of the annual produce is, it seems,
three or four times greater than the whole had been before. In the
progress of improvement, rent, though it increases in proportion to the
extent, diminishes in proportion to the produce of the land.

In the opulent countries of Europe, great capitals are at present employed
in trade and manufactures. In the ancient state, the little trade that was
stirring, and the few homely and coarse manufactures that were carried on,
required but very small capitals. These, however, must have yielded very
large profits. The rate of interest was nowhere less than ten per cent.
and their profits must have been sufficient to afford this great interest.
At present, the rate of interest, in the improved parts of Europe, is
nowhere higher than six per cent.; and in some of the most improved, it is
so low as four, three, and two per cent. Though that part of the revenue
of the inhabitants which is derived from the profits of stock, is always
much greater in rich than in poor countries, it is because the stock is
much greater; in proportion to the stock, the profits are generally much
less.

That part of the annual produce, therefore, which, as soon as it comes
either from the ground, or from the hands of the productive labourers, is
destined for replacing a capital, is not only much greater in rich than in
poor countries, but bears a much greater proportion to that which is
immediately destined for constituting a revenue either as rent or as
profit. The funds destined for the maintenance of productive labour are
not only much greater in the former than in the latter, but bear a much
greater proportion to those which, though they may be employed to maintain
either productive or unproductive hands, have generally a predilection for
the latter.

The proportion between those different funds necessarily determines in
every country the general character of the inhabitants as to industry or
idleness. We are more industrious than our forefathers, because, in the
present times, the funds destined for the maintenance of industry are much
greater in proportion to those which are likely to be employed in the
maintenance of idleness, than they were two or three centuries ago. Our
ancestors were idle for want of a sufficient encouragement to industry. It
is better, says the proverb, to play for nothing, than to work for
nothing. In mercantile and manufacturing towns, where the inferior ranks
of people are chiefly maintained by the employment of capital, they are in
general industrious, sober, and thriving; as in many English, and in most
Dutch towns. In those towns which are principally supported by the
constant or occasional residence of a court, and in which the inferior
ranks of people are chiefly maintained by the spending of revenue, they
are in general idle, dissolute, and poor; as at Rome, Versailles,
Compeigne, and Fontainbleau. If you except Rouen and Bourdeaux, there is
little trade or industry in any of the parliament towns of France; and the
inferior ranks of people, being chiefly maintained by the expense of the
members of the courts of justice, and of those who come to plead before
them, are in general idle and poor. The great trade of Rouen and Bourdeaux
seems to be altogether the effect of their situation. Rouen is necessarily
the entrepot of almost all the goods which are brought either from foreign
countries, or from the maritime provinces of France, for the consumption
of the great city of Paris. Bourdeaux is, in the same manner, the entrepot
of the wines which grow upon the banks of the Garronne, and of the rivers
which run into it, one of the richest wine countries in the world, and
which seems to produce the wine fittest for exportation, or best suited to
the taste of foreign nations. Such advantageous situations necessarily
attract a great capital by the great employment which they afford it; and
the employment of this capital is the cause of the industry of those two
cities. In the other parliament towns of France, very little more capital
seems to be employed than what is necessary for supplying their own
consumption; that is, little more than the smallest capital which can be
employed in them. The same thing may be said of Paris, Madrid, and Vienna.
Of those three cities, Paris is by far the most industrious, but Paris
itself is the principal market of all the manufactures established at
Paris, and its own consumption is the principal object of all the trade
which it carries on. London, Lisbon, and Copenhagen, are, perhaps, the
only three cities in Europe, which are both the constant residence of a
court, and can at the same time be considered as trading cities, or as
cities which trade not only for their own consumption, but for that of
other cities and countries. The situation of all the three is extremely
advantageous, and naturally fits them to be the entrepots of a great part
of the goods destined for the consumption of distant places. In a city
where a great revenue is spent, to employ with advantage a capital for any
other purpose than for supplying the consumption of that city, is 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 such a
capital. The idleness of the greater part of the people who are maintained
by the expense of revenue, corrupts, it is probable, the industry of those
who ought to be maintained by the employment of capital, and renders it
less 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 assembled in it, when it ceased to
be the necessary residence of the principal nobility and gentry of
Scotland, it became a city of some trade and industry. It still continues,
however, to be the residence of the principal courts of justice in
Scotland, of the boards of customs and excise, etc. A considerable
revenue, therefore, still continues to be spent 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 sometimes been observed, after having made
considerable progress in manufactures, have become idle and poor, in
consequence of a great lord’s having taken up his residence in their
neighbourhood.

The proportion between capital and revenue, therefore, seems everywhere to
regulate the proportion between industry and idleness. Wherever capital
predominates, industry prevails; wherever revenue, idleness. Every
increase or diminution of capital, therefore, naturally tends to increase
or diminish the real quantity of industry, the number of productive hands,
and consequently 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 parsimony, and diminished by prodigality and
misconduct.

Whatever a person saves from his revenue he adds to his capital, and
either employs it himself in maintaining an additional number of
productive hands, or enables some other person to do so, by lending it to
him for an interest, that is, for a share of the profits. As the capital
of an individual can be increased only by what he saves from his annual
revenue or his annual gains, so the capital of a society, which is the
same with that of all the individuals who compose it, can be increased
only in the same manner.

Parsimony, and not industry, is the immediate cause of the increase of
capital. Industry, indeed, provides the subject which parsimony
accumulates; but whatever industry might acquire, if parsimony did not
save and store up, the capital would never be the greater.

Parsimony, by increasing the fund which is destined for the maintenance of
productive hands, tends to increase the number of those hands whose labour
adds to the value of the subject upon which it is bestowed. It tends,
therefore, to increase the exchangeable value of the annual produce of the
land and labour of the country. It puts into motion an additional quantity
of industry, which gives an additional value to the annual produce.

What is annually saved, is as regularly consumed as what is annually
spent, and nearly in the same time too: but it is consumed by a different
set of people. That portion of his revenue which a rich man annually
spends, is, in most cases, consumed by idle guests and menial servants,
who leave nothing behind them in return for their consumption. That
portion which he annually saves, as, for the sake of the profit, it is
immediately employed as a capital, is consumed in the same manner, and
nearly in the same time too, but by a different set of people: by
labourers, manufacturers, and artificers, who reproduce, with a profit,
the value of their annual consumption. His revenue, we shall suppose, is
paid him in money. Had he spent the whole, the food, clothing, and
lodging, which the whole could have purchased, would have been distributed
among the former set of people. By saving a part of it, as that part is,
for the sake of the profit, immediately employed as a capital, either by
himself or by some other person, the food, clothing, and lodging, which
may be purchased with it, are necessarily reserved for the latter. The
consumption is the same, but the consumers are different.

By what a frugal man annually saves, he not only affords maintenance to an
additional number of productive hands, for that of the ensuing year, but
like the founder of a public work-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 positive law, by any trust-right or deed of
mortmain. It is always guarded, however, by a very powerful principle, the
plain and evident interest of every individual to whom any share of it
shall ever belong. No part of it can ever afterwards be employed to
maintain any but productive hands, without an evident loss to the person
who thus perverts it from its proper destination.

The prodigal perverts it in this manner: By not confining his expense
within his income, he encroaches upon his capital. Like him who perverts
the revenues of some pious foundation to profane purposes, he pays the
wages of idleness with those funds which the frugality of his forefathers
had, as it were, consecrated to the maintenance of industry. By
diminishing the funds destined for the employment of productive labour, he
necessarily diminishes, so far as it depends upon him, the quantity of
that labour which adds a value to the subject 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 some were not compensated by the frugality of others,
the conduct of every prodigal, by feeding the idle with the bread of the
industrious, would tend not only to beggar himself, but to impoverish his
country.

Though the expense 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 society would still be the same. 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 still be some diminution in what would otherwise
have been the value of the annual produce of the land and labour of the
country.

This expense, it may be said, indeed, not being in foreign goods, and not
occasioning any exportation of gold and silver, the same quantity of money
would remain in the country as before. But if the quantity of food and
clothing which were thus consumed by unproductive, had been distributed
among productive hands, they would have reproduced, together with a
profit, the full value of their consumption. The same quantity of money
would, in this case, equally have remained in the country, and there
would, besides, have been a reproduction of an equal value of consumable
goods. There would have been two values instead of one.

The same quantity of money, besides, can not long remain in any country in
which the value of the annual produce diminishes. The sole use of money is
to circulate consumable goods. By means of it, provisions, materials, and
finished work, are bought and sold, and distributed to their proper
consumers. The quantity of money, therefore, which can be annually
employed in any country, must be determined by the value of the consumable
goods annually circulated within it. These must consist, either in the
immediate produce of the land and labour of the country itself, or in
something which had been purchased with some part of that produce. Their
value, therefore, must diminish as the value of that produce diminishes,
and along with it the quantity of money which can be employed in
circulating them. But the money which, by this annual diminution of
produce, is annually thrown out of domestic circulation, will not be
allowed to lie idle. The interest of whoever possesses it requires that it
should be employed; but having no employment at home, it will, in spite of
all laws and prohibitions, be sent abroad, and employed in purchasing
consumable goods, which may be of some use at home. Its annual exportation
will, in this manner, continue for some time to add something to the
annual consumption of the country beyond the value of its own annual
produce. What in the days of its prosperity had been saved from that
annual produce, and employed in purchasing gold and silver, will
contribute, for some little time, to support its consumption in adversity.
The exportation of gold and silver is, in this case, not the cause, but
the effect of its declension, and may even, for some little time,
alleviate the misery of that declension.

The quantity of money, on the contrary, must in every country naturally
increase as the value of the annual produce increases. The value of the
consumable goods annually circulated within the society being greater,
will require a greater quantity of money to circulate them. A part of the
increased produce, therefore, will naturally be employed in purchasing,
wherever it is to be had, the additional quantity of gold and silver
necessary for circulating the rest. The increase of those metals will, in
this case, be the effect, not the cause, of the public prosperity. Gold
and silver are purchased everywhere in the same manner. The food,
clothing, and lodging, the revenue and maintenance, of all those whose
labour or stock is employed in bringing them from the mine to the market,
is the price paid for them in Peru as well as in England. The country
which has this price to pay, will never belong without the quantity of
those metals which it has occasion for; and no country will ever long
retain a quantity which it has no occasion for.

Whatever, therefore, we may imagine the real wealth and revenue of a
country to consist in, whether in the value of the annual produce of its
land and labour, as plain reason seems to dictate, or in the quantity of
the precious metals which circulate within it, as vulgar prejudices
suppose; in either view of the matter, every prodigal appears to be a
public enemy, and every frugal man a public benefactor.

The effects of misconduct are often the same as those of prodigality.
Every injudicious and unsuccessful project in agriculture, mines,
fisheries, trade, or manufactures, tends in the same manner to diminish
the funds destined for the maintenance of productive labour. In every such
project, though the capital is consumed by productive hands only, yet as,
by the injudicious manner in which they are employed, they do not
reproduce the full value of their consumption, there must always be some
diminution in what would otherwise have been the productive funds of the
society.

It can seldom happen, indeed, that the circumstances of a great nation can
be much affected either by the prodigality or misconduct of individuals;
the profusion or imprudence of some being always more than compensated by
the frugality and good conduct of others.

With regard to profusion, the principle which prompts to expense is the
passion for present enjoyment; which, though sometimes violent and very
difficult to be restrained, is in general only momentary and occasional.
But the principle which prompts to save, is the desire of bettering our
condition; a desire which, though generally calm and dispassionate, comes
with us from the womb, and never leaves us till we go into the grave. In
the whole interval which separates those two moments, there is scarce,
perhaps, a single instance, in which any man is so perfectly and
completely satisfied with his situation, as to be without any wish of
alteration or improvement of any kind. An augmentation of fortune is the
means by which the greater part of men propose and wish to better their
condition. It is the means the most vulgar and the most obvious; and the
most likely way of augmenting their fortune, is to save and accumulate
some part of what they acquire, either regularly and annually, or upon
some extraordinary occasion. Though the principle of expense, therefore,
prevails in almost all men upon some occasions, and in some men upon
almost all occasions; yet in the greater part of men, taking the whole
course of their life at an average, the principle of frugality seems not
only to predominate, but to predominate very greatly.

With regard to misconduct, the number of prudent and successful
undertakings is everywhere much greater than that of injudicious and
unsuccessful ones. After all our complaints of the frequency of
bankruptcies, the unhappy men who fall into this misfortune, make but a
very small part of the whole number engaged in trade, and all other sorts
of business; not much more, perhaps, than one in a thousand. Bankruptcy
is, perhaps, the greatest and most humiliating calamity which can befal an
innocent man. The greater part of men, therefore, are sufficiently careful
to avoid it. Some, indeed, do not avoid it; as some do not avoid the
gallows.

Great nations are never impoverished by private, though they sometimes are
by public prodigality and misconduct. The whole, or almost the whole
public revenue is, in most countries, employed in maintaining unproductive
hands. Such are the people who compose a numerous and splendid court, a
great ecclesiastical establishment, great fleets and armies, who in time
of peace produce nothing, and in time of war acquire nothing which can
compensate the expense of maintaining them, even while the war lasts. Such
people, as they themselves produce nothing, are all maintained by the
produce of other men’s labour. When multiplied, therefore, to an
unnecessary number, they may in a particular year consume so great a share
of this produce, as not to leave a sufficiency for maintaining the
productive labourers, who should reproduce it next year. The next year’s
produce, therefore, will be less than that of the foregoing; and if the
same disorder should continue, that of the third year will be still less
than that of the second. Those unproductive hands who should be maintained
by a part only of the spare revenue of the people, may consume so great a
share of their whole revenue, and thereby oblige so great a number to
encroach upon their capitals, upon the funds destined for the maintenance
of productive labour, that all the frugality and good conduct of
individuals may not be able to compensate the waste and degradation of
produce occasioned by this violent and forced encroachment.

This frugality and good conduct, however, is, upon most occasions, it
appears from experience, sufficient to compensate, not only the private
prodigality and misconduct of individuals, but the public extravagance of
government. The uniform, constant, and uninterrupted effort of every man
to better his condition, the principle from which public and national, as
well as private opulence is originally derived, is frequently powerful
enough to maintain the natural progress of things towards improvement, in
spite both of the extravagance of government, and of the greatest errors
of administration. Like the unknown principle of animal life, it
frequently restores health and vigour to the constitution, in spite not
only of the disease, but of the absurd prescriptions of the doctor.

The annual produce of the land and labour of any nation can be increased
in its value by no other means, but by increasing either the number of its
productive labourers, or the productive powers of those labourers who had
before been employed. The number of its productive labourers, it is
evident, can never be much increased, but in consequence of an increase of
capital, or of the funds destined for maintaining them. The productive
powers of the same number of labourers cannot be increased, but in
consequence either of some addition and improvement to those machines and
instruments which facilitate and abridge labour, or of more proper
division and distribution of employment. In either case, an additional
capital is almost always required. It is by means of an additional capital
only, that the undertaker of any work can either provide his workmen with
better machinery, or make a more proper distribution of employment among
them. When the work to be done consists of a number of parts, to keep
every man constantly employed in one way, requires a much greater capital
than where every man is occasionally employed in every different part of
the work. When we compare, therefore, the state of a nation at two
different periods, and find that the annual produce of its land and labour
is evidently greater at the latter than at the former, that its lands are
better cultivated, its manufactures more numerous and more flourishing,
and its trade more extensive; we may be assured that its capital must have
increased during the interval between those two periods, and that more
must have been added to it by the good conduct of some, than had been
taken from it either by the private misconduct of others, or by the public
extravagance of government. But we shall find this to have been the case
of almost all nations, in all tolerably quiet and peaceable times, even of
those who have not enjoyed the most prudent and parsimonious governments.
To form a right judgment of it, indeed, we must compare the state of the
country at periods somewhat distant from one another. The progress is
frequently so gradual, that, at near periods, the improvement is not only
not sensible, but, from the declension either of certain branches of
industry, or of certain districts of the country, things which sometimes
happen, though the country in general is in great prosperity, there
frequently arises a suspicion, that the riches and industry of the whole
are decaying.

The annual produce of the land and labour of England, for example, is
certainly much greater than it was a little more than a century ago, at
the restoration of Charles II. Though at present few people, I believe,
doubt of this, yet during this period five years have seldom passed away,
in which some book or pamphlet has not been published, written, too, with
such abilities as to gain some authority with the public, and pretending
to demonstrate that the wealth of the nation was fast declining; that the
country was depopulated, agriculture neglected, manufactures decaying, and
trade undone. Nor have these publications been all party pamphlets, the
wretched offspring of falsehood and venality. Many of them have been
written by very candid and very intelligent people, who wrote nothing but
what they believed, and for no other reason but because they believed it.

The annual produce of the land and labour of England, again, was certainly
much greater at the Restoration than we can suppose it to have been about
a hundred years before, at the accession of Elizabeth. At this period,
too, we have all reason to believe, the country was much more advanced in
improvement, than it had been about a century before, towards the close of
the dissensions between the houses of York and Lancaster. Even then it
was, probably, in a better condition than it had been at the Norman
conquest: and at the Norman conquest, than during the confusion of the
Saxon heptarchy. Even at this early period, it was certainly a more
improved country than at the invasion of Julius Caesar, when its
inhabitants were nearly in the same state with the savages in North
America.

In each of those periods, however, there was not only much private and
public profusion, many expensive and unnecessary wars, great perversion of
the annual produce from maintaining productive to maintain unproductive
hands; but sometimes, in the confusion of civil discord, such absolute
waste and destruction of stock, as might be supposed, not only to retard,
as it certainly did, the natural accumulation of riches, but to have left
the country, at the end of the period, poorer than at the beginning. Thus,
in the happiest and most fortunate period of them all, that which has
passed since the Restoration, how many disorders and misfortunes have
occurred, which, could they have been foreseen, not only the
impoverishment, but the total ruin of the country would have been expected
from them? The fire and the plague of London, the two Dutch wars, the
disorders of the revolution, the war in Ireland, the four expensive French
wars of 1688, 1701, 1742, and 1756, together with the two rebellions of
1715 and 1745. In the course of the four French wars, the nation has
contracted more than £145,000,000 of debt, over and above all the other
extraordinary annual expense which they occasioned; so that the whole
cannot be computed at less than £200,000,000. So great a share of the
annual produce of the land and labour of the country, has, since the
Revolution, been employed upon different occasions, in maintaining an
extraordinary number of unproductive hands. But had not those wars given
this particular direction to so large a capital, the greater part of it
would naturally have been employed in maintaining productive hands, whose
labour would have replaced, with a profit, the whole value of their
consumption. The value of the annual produce of the land and labour of the
country would have been considerably increased by it every year, and every
years increase would have augmented still more that of the following year.
More houses would have been built, more lands would have been improved,
and those which had been improved before would have been better
cultivated; more manufactures would have been established, and those which
had been established before would have been more extended; and to what
height the real wealth and revenue of the country might by this time have
been raised, it is not perhaps very easy even to imagine.

But though the profusion of government must undoubtedly have retarded the
natural progress of England towards wealth and improvement, it has not
been able to stop it. The annual produce of its land and labour is
undoubtedly much greater at present than it was either at the Restoration
or at the Revolution. The capital, therefore, annually employed in
cultivating this land, and in maintaining this labour, must likewise be
much greater. In the midst of all the exactions of government, this
capital has been silently and gradually accumulated by the private
frugality and good conduct of individuals, by their universal, continual,
and uninterrupted effort to better their own condition. It is this effort,
protected by law, and allowed by liberty to exert itself in the manner
that is most advantageous, which has maintained the progress of England
towards opulence and improvement in almost all former times, and which, it
is to be hoped, will do so in all future times. England, however, as it
has never been blessed with a very parsimonious government, so parsimony
has at no time been the characteristic virtue of its inhabitants. It is
the highest impertinence and presumption, therefore, in kings and
ministers to pretend to watch over the economy of private people, and to
restrain their expense, either by sumptuary laws, or by prohibiting the
importation of foreign luxuries. They are themselves always, and without
any exception, the greatest spendthrifts in the society. Let them look
well after their own expense, and they may safely trust private people
with theirs. If their own extravagance does not ruin the state, that of
the subject never will.

As frugality increases, and prodigality diminishes, the public capital, so
the conduct of those whose expense just equals their revenue, without
either accumulating or encroaching, neither increases nor diminishes it.
Some modes of expense, however, seem to contribute more to the growth of
public opulence than others.

The revenue of an individual may be spent, either in things which are
consumed immediately, and in which one day’s expense can neither alleviate
nor support that of another; or it may be spent in things mere durable,
which can therefore be accumulated, and in which every day’s expense may,
as he chooses, either alleviate, or support and heighten, the effect of
that of the following day. A man of fortune, for example, may either spend
his revenue in a profuse and sumptuous table, and in maintaining a great
number of menial servants, and a multitude of dogs and horses; or,
contenting himself with a frugal table, and few attendants, he may lay out
the greater part of it in adorning his house or his country villa, in
useful or ornamental buildings, in useful or ornamental furniture, in
collecting books, statues, pictures; or in things more frivolous, jewels,
baubles, ingenious trinkets of different kinds; or, what is most trifling
of all, in amassing a great wardrobe of fine clothes, like the favourite
and minister of a great prince who died a few years ago. Were two men of
equal fortune to spend their revenue, the one chiefly in the one way, the
other in the other, the magnificence of the person whose expense had been
chiefly in durable commodities, would be continually increasing, every
day’s expense contributing something to support and heighten the effect of
that of the following day; that of the other, on the contrary, would be no
greater at the end of the period than at the beginning. The former too
would, at the end of the period, be the richer man of the two. He would
have a stock of goods of some kind or other, which, though it might not be
worth all that it cost, would always be worth something. No trace or
vestige of the expense of the latter would remain, and the effects of ten
or twenty years’ profusion would be as completely annihilated as if they
had never existed.

As the one mode of expense is more favourable than the other to the
opulence of an individual, so is it likewise to that of a nation. The
houses, the furniture, the clothing of the rich, in a little time, become
useful to the inferior and middling ranks of people. They are able to
purchase them when their superiors grow weary of them; and the general
accommodation of the whole people is thus gradually improved, when this
mode of expense becomes universal among men of fortune. In countries which
have long been rich, you will frequently find the inferior ranks of people
in possession both of houses and furniture perfectly good and entire, but
of which neither the one could have been built, nor the other have been
made for their use. What was formerly a seat of the family of Seymour, is
now an inn upon the Bath road. The marriage-bed of James I. of Great
Britain, which his queen brought with her from Denmark, as a present fit
for a sovereign to make to a sovereign, was, a few years ago, the ornament
of an alehouse at Dunfermline. In some ancient cities, which either have
been long stationary, or have gone somewhat to decay, you will sometimes
scarce find a single house which could have been built for its present
inhabitants. If you go into those houses, too, you will frequently find
many excellent, though antiquated pieces of furniture, which are still
very fit for use, and which could as little have been made for them. Noble
palaces, magnificent villas, great collections of books, statues,
pictures, and other curiosities, are frequently both an ornament and an
honour, not only to the neighbourhood, but to the whole country to which
they belong. Versailles is an ornament and an honour to France, Stowe and
Wilton to England. Italy still continues to command some sort of
veneration, by the number of monuments of this kind which it possesses,
though the wealth which produced them has decayed, and though the genius
which planned them seems to be extinguished, perhaps from not having the
same employment.

The expense, too, which is laid out in durable commodities, is favourable
not only to accumulation, but to frugality. If a person should at any time
exceed in it, he can easily reform without exposing himself to the censure
of the public. To reduce very much the number of his servants, to reform
his table from great profusion to great frugality, to lay down his
equipage after he has once set it up, are changes which cannot escape the
observation of his neighbours, and which are supposed to imply some
acknowledgment of preceding bad conduct. Few, therefore, of those who have
once been so unfortunate as to launch out too far into this sort of
expense, have afterwards the courage to reform, till ruin and bankruptcy
oblige them. But if a person has, at any time, been at too great an
expense in building, in furniture, in books, or pictures, no imprudence
can be inferred from his changing his conduct. These are things in which
further expense is frequently rendered unnecessary by former expense; and
when a person stops short, he appears to do so, not because he has
exceeded his fortune, but because he has satisfied his fancy.

The expense, besides, that is laid out in durable commodities, gives
maintenance, commonly, to a greater number of people than that which is
employed in the most profuse hospitality. Of two or three hundred weight
of provisions, which may sometimes be served up at a great festival, one
half, perhaps, is thrown to the dunghill, and there is always a great deal
wasted and abused. But if the expense of this entertainment had been
employed in setting to work masons, carpenters, upholsterers, mechanics,
etc. a quantity of provisions of equal value would have been distributed
among a still greater number of people, who would have bought them in
pennyworths and pound weights, and not have lost or thrown away a single
ounce of them. In the one way, besides, this expense maintains productive,
in the other unproductive hands. In the one way, therefore, it increases,
in the other it does not increase the exchangeable value of the annual
produce of the land and labour of the country.

I would not, however, by all this, be understood to mean, that the one
species of expense always betokens a more liberal or generous spirit than
the other. When a man of fortune spends his revenue chiefly in
hospitality, he shares the greater part of it with his friends and
companions; but when he employs it in purchasing such durable commodities,
he often spends the whole upon his own person, and gives nothing to any
body without an equivalent. The latter species of expense, therefore,
especially when directed towards frivolous objects, the little ornaments
of dress and furniture, jewels, trinkets, gew-gaws, frequently indicates,
not only a trifling, but a base and selfish disposition. All that I mean
is, that the one sort of expense, as it always occasions some accumulation
of valuable commodities, as it is more favourable to private frugality,
and, consequently, to the increase of the public capital, and as it
maintains productive rather than unproductive hands, conduces more than
the other to the growth of public opulence.