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 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
or the ensuing year； but； like the founder of a public workhouse；
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
was not compensated by the frugality of others； the conduct of
every prodigal； by feeding the idle with the bread of the
industrious； tends 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； cannot 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