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 re-produce, 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
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 
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