their capital, they can place in their stock reserved 
for immediate consumption, or spend upon 
their subsistence, conveniencies, and amusements
Their real wealth, too, is in proportion
not to their gross, but to their neat revenue
The whole expense of maintaining the fixed 
capital must evidently be excluded from the 
neat revenue of the society. Neither the materials 
necessary for supporting their useful 
machines and instruments of trade, their profitable 
buildings, &c. nor the produce of the 
labour necessary for fashioning those materials 
into the proper form, can ever make any part 
of it. The price of that labour may indeed 
make a part of it; as the workmen so employed 
may place the whole value of their 
wages in their stock reserved for immediate 
consumption. But in other sorts of labour
both the price and the produce go to this stock
the price to that of the workmen, the produce 
to that of other people, whose subsistence, conveniencies
and amusements, are augmented 
by the labour of those workmen
The intention of the fixed capital is to increase 
the productive powers of labour, or to 
enable the same number of labourers to perform 
a much greater quantity of work. In a 
farm where all the necessary buildings, fences
drains, communications, &c. are in the most 
perfect good order, the same number of labourers 
and labouring cattle will raise a much 
greater produce, than in one of equal extent 
and equally good ground, but not furnished 
with equal conveniencies. In manufactures
the same number of hands, assisted with the 
best machinery, will work up a much greater 
quantity of goods than with more imperfect 
instruments of trade. The expense which is 
properly laid out upon a fixed capital of any 
kind, is always repaid with great profit, and 
increases the annual produce by a much greater 
value than that of the support which such improvements 
require. This support, however, 
still requires a certain portion of that produce. 
A certain quantity of materials, and the labour 
of a certain number of workmen, both 
of which might have been immediately employed 
to augment the food, clothing, and 
lodging, the subsistence and conveniencies of 
the society, are thus diverted to another employment
highly advantageous indeed, but still 
different from this one. It is upon this account 
that all such improvements in mechanics
as enable the same number of workmen to 
perform an equal quantity of work with 
cheaper and simpler machinery than had been 
usual before, are always regarded as advantageous 
to every society. A certain quantity of 
materials, and the labour of a certain number 
of workmen, which had before been employed 
in supporting a more complex and expensive 
machinery, can afterwards be applied to augment 
the quantity of work which that or any 
other machinery is useful only for performing
The undertaker of some great manufactory, 
who employs a thousand a-year in the maintenance 
of his machinery, if he can reduce 
this expense to five hundred, will naturally 
employ the other five hundred in purchasing 
an additional quantity of materials, to be 
wrought up by an additional number of workmen
The quantity of that work, therefore, 
which his machinery was useful only for performing
will naturally be augmented, and 
with it all the advantage and conveniency 
which the society can derive from that work
The expense of maintaining the fixed capital 
in a great country, may very properly be 
compared to that of repairs in a private estate. 
The expense of repairs may frequently be necessary 
for supporting the produce of the estate, 
and consequently both the gross and the 
neat rent of the landlord. When by a more 
proper direction, however, it can be diminished 
without occasioning any diminution of 
produce, the gross rent remains at least the 
same as before, and the neat rent is necessarily 
But though the whole expense of maintaining 
the fixed capital is thus necessarily excluded 
from the neat revenue of the society, it 
is not the same case with that of maintaining 
the circulating capital. Of the four parts of 
which this latter capital is composed, money
provisions, materials, and finished work, the 
three last, it has already been observed, are 
regularly withdrawn from it, and placed either 
in the fixed capital of the society, or in 
their stock reserved for immediate consumption
Whatever portion of those consumable 
goods is not employed in maintaining the former, 
goes all to the latter, and makes a part of 
the neat revenue of the society. The maintenance 
of those three parts of the circulating 
capital, therefore, withdraws no portion of the 
annual produce from the neat revenue of the 
society, besides what is necessary for maintaining 
the fixed capital
The circulating capital of a society is in this 
respect different from that of an individual
That of an individual is totally excluded from 
making any part of his neat revenue, which 
must consist altogether in his profits. But 
though the circulating capital of every individual 
makes a part of that of the society to 
which he belongs, it is not upon that account 
totally excluded from making a part likewise 
of their neat revenue. Though the whole 
goods in a merchant's shop must by no means 
be placed in his own stock reserved for immediate 
consumption, they may in that of other 
people, who, from a revenue derived from 
other funds, may regularly replace their value 
to him, together with its profits, without 
occasioning any diminution either of his capital 
or of theirs. 
Money, therefore, is the only part of the circulating 
capital of a society, of which the 
maintenance can occasion any diminution in 
their neat revenue