The stock which is lent at interest is always 
considered as a capital by the lender. He 
expects that in due time it is to be restored to 
him, and that, in the mean time, the borrower 
is to pay him a certain annual rent for the use 
of it. The borrower may use it either as a 
capital, or as a stock reserved for immediate 
consumption. If he uses it as a capital, he 
employs it in the maintenance of productive 
labourers, who reproduce the value, with a 
profit. He can, in this case, both restore the 
capital, and pay the interest, without alienating 
or encroaching upon any other source of 
revenue. If he uses it as a stock reserved for 
immediate consumption, he acts the part of a 
prodigal, and dissipates, in the maintenance 
of the idle, what was destined for the support 
of the industrious. He can, in this case, neither 
restore the capital nor pay the interest
without either alienating or encroaching upon 
some other source of revenues such as the property 
or the rent of land
The stock which is lent at interest is, no 
doubt, occasionally employed in both these 
ways, but in the former much more frequently 
than in the latter. The man who borrows in 
order to spend will soon be ruined, and he 
who lends to him will generally have occasion 
to repent of his folly. To borrow or to lend 
for such a purpose, therefore, is, in all cases, 
where gross usury is out of the question, contrary 
to the interest of both parties; and 
though it no doubt happens sometimes, that 
people do both the one and the other, yet, 
from the regard that all men have for their 
own interest, we may be assured, that it cannot 
happen so very frequently as we are sometimes 
apt to imagine. Ask any rich man of common 
prudence, to which of the two sorts of 
people he has lent the greater part of his stock
to those who he thinks will employ it profitably
or to those who will spend it idly, and he 
will laugh at you for proposing the question
Even among borrowers, therefore, not the 
people in the world most famous for frugality
the number of the frugal and industrious 
surpasses considerably that of the prodigal 
and idle
The only people to whom stock is commonly 
lent, without their being expected to make any 
very profitable use of it, are country gentlemen, 
who borrow upon mortgage. Even they 
scarce ever borrow merely to spend. What 
they borrow, one may say, is commonly spent 
before they borrow it. They have generally 
consumed so great a quantity of goods, advanced 
to them upon credit by shop-keepers 
and tradesmen, that they find it necessary to 
borrow at interest, in order to pay the debt. 
The capital borrowed replaces the capitals of 
those shop-keepers and tradesmen which the 
country gentlemen could not have replaced 
from the rents of their estates. It is not properly 
borrowed in order to be spent, but in 
order to replace a capital which had been spent 
Almost all loans at interest are made in 
money, either of paper, or of gold and silver; 
but what the borrower really wants, and what 
the lender readily supplies him with, is not 
the money, but the money's worth, or the 
goods which it can purchase. If he wants it 
as a stock for immediate consumption, it is 
those goods only which he can place in that 
stock. If he wants it as a capital for employing 
industry, it is from those goods only that 
the industrious can be furnished with the tools
materials, and maintenance necessary for carrying 
on their work. By means of the loan, 
the lender, as it were, assigns to the borrower 
his right to a certain portion of the annual 
produce of the land and labour of the country, 
to be employed as the borrower pleases. 
The quantity of stock, therefore, or, as it is 
commonly expressed, of money, which can be 
lent at interest in any country, is not regulated 
by the value of the money, whether paper 
or coin, which serves as the instrument 
of the different loans made in that country
but by the value of 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, not only for replacing 
a capital, but such a capital as the 
owner does not care to be at the trouble of 
employing himself. As such capitals are commonly 
lent out and paid back in money, they 
constitute what is called the monied interest
It is distinct, not only from the landed, but 
from the trading and manufacturing interests, 
as in these last the owners themselves employ 
their own capitals. Even in the monied interest
however, the money is, as it were, but 
the deed or assignment, which conveys from 
one hand to another those capitals which the 
owners do not care to employ themselves. 
Those capitals may be greater, in almost any 
proportion, than the amount of the money 
which serves as the instrument of their conveyance; 
the same pieces of money successively 
serving for many different loans, as well 
as for many different purchases. A, for example, 
lends to W L.1000, with which W 
immediately purchases of B L.1000 worth of 
goods. B having no occasion for the money 
himself, lends the identical pieces to X, with 
which X immediately purchases of C another 
L.1000 worth of goods. C, in the same manner
and for the same reason, lends them to 
Y, who again purchases goods with them of 
D. In this manner, the same pieces, either 
of coin or of paper, may, in the course of a