The third and last of the three portions into which the general stock of the society naturally divides itself is the circulating capital, which affords a revenue only by changing masters. It includes
(a) all the money by means of which all the other three are circulated and distributed to their proper consumers;
(b) all the stock of provisions which are in the possession of the butcher, farmer, corn-merchant, &c., and from the sale of which they expect to derive a profit;
(c) all the materials, whether altogether rude, or more or less manufactured, for clothes, furniture and building, which are not yet made up into any of these shapes, but remain in the hands of the growers, manufacturers and merchants; and
(d) all the work which is made up and completed, but is not yet disposed of to the proper consumers.
The substitution of paper in the place of gold and silver money replaces a very expensive instrument of commerce by one much less costly, and sometimes equally convenient. Circulation comes to be carried on by a new wheel, which it costs less both to erect and to maintain than the old one. The effect of the issue of large quantities of bank-notes in any country is to send abroad the gold, which is no longer needed at home, in order that it may seek profitable employment. It is not sent abroad for nothing, but is exchanged for foreign goods of various kinds in such a way as to add to the revenue and profits of the country from which it is sent; unless, indeed, it is spent abroad on such goods as are likely to be consumed by idle people who produce nothing.
III.—The Progress of Opulence in Different Nations
The greatest commerce of every civilised society is that carried on between the inhabitants of the town and those of the country. It consists in the exchange of rude for manufactured produce, either immediately, or by the intervention of money, or of some sort of paper which represents money. The country supplies the town with the means of subsistence, and the materials for manufacture. The town repays this supply by sending back a part of the manufactured produce to the inhabitants of the country. The town, in which there neither is nor can be any reproduction of substances, may very properly be said to gain its whole subsistence from the country. And in how great a degree the country is benefited by the commerce of the town may be seen from a comparison of the cultivation of the lands in the neighbourhood of any considerable town with that of those which He at some distance from it.
As subsistence is, in the nature of things, prior to conveniency and luxury, so the rural industries which procure the former must be prior to the urban industries which minister to the latter. The greater part of the capital of every growing society is therefore first directed to agriculture, afterwards to manufactures, and last of all to foreign commerce. But this natural order of things has, in all the modern states of Europe, been in many respects entirely inverted. The foreign commerce of some of their cities has given rise to their finer manufactures, and manufactures and foreign commerce together have given birth to the principal improvements of agriculture. The manners and customs which the nature of their original government introduced, and which remained after that government was greatly altered, necessarily forced them into this unnatural and retrograde order.