Thethirdandlastofthethreeportionsintowhichthegeneralstockofthesocietynaturallydividesitself，isthecirculatingcapital;ofwhichthecharacteristicis，thatitaffordsarevenueonlybycirculatingorchangingmasters。Itiscomposedlikewiseoffourparts:
　　First，ofthemoneybymeansofwhichalltheotherthreearecirculatedanddistributedtotheirproperconsumers:
　　Secondly，ofthestockofprovisionswhichareinthepossessionofthebutcher，thegrazier，thefarmer，thecorn—merchant，thebrewer，etc。，andfromthesaleofwhichtheyexpecttoderiveaprofit:
　　Thirdly，ofthematerials，whetheraltogetherrude，ormoreorlessmanufactured，ofclothes，furniture，andbuilding，whicharenotyetmadeupintoanyofthosethreeshapes，butwhichremaininthehandsofthegrowers，themanufacturers，themercersanddrapers，thetimbermerchants，thecarpentersandjoiners，thebrickmakers，etc。
　　Fourthly，andlastly，oftheworkwhichismadeupandcompleted，butwhichisstillinthehandsofthemerchantormanufacturer，andnotyetdisposedofordistributedtotheproperconsumers;suchasthefinishedworkwhichwefrequentlyfindready—madeintheshopsofthesmith，thecabinet—maker，thegoldsmith，thejeweller，thechina—merchant，etc。Thecirculatingcapitalconsistsinthismanner，oftheprovisions，materials，andfinishedworkofallkindsthatareinthehandsoftheirrespectivedealers，andofthemoneythatisnecessaryforcirculatinganddistributingthemtothosewhoarefinallytouseortoconsumethem。
　　Ofthesefourparts，three—provisions，materials，andfinishedwork—are，eitherannually，orinalongerorshorterperiod，regularlywithdrawnfromit，andplacedeitherinthefixedcapitalorinthestockreservedforimmediateconsumption。
　　Everyfixedcapitalisbothoriginallyderivedfrom，andrequirestobecontinuallysupportedbyacirculatingcapital。
　　Allusefulmachinesandinstrumentsoftradeareoriginallyderivedfromacirculatingcapital，whichfurnishesthematerialsofwhichtheyaremade，andthemaintenanceoftheworkmenwhomakethem。Theyrequire，too，acapitalofthesamekindtokeeptheminconstantrepair。
　　Nofixedcapitalcanyieldanyrevenuebutbymeansofacirculatingcapital。Themostusefulmachinesandinstrumentsoftradewillproducenothingwithoutthecirculatingcapitalwhichaffordsthematerialstheyareemployedupon，andthemaintenanceoftheworkmenwhoemploythem。Land，howeverimproved，willyieldnorevenuewithoutacirculatingcapital，whichmaintainsthelabourerswhocultivateandcollectitsproduce。
　　Tomaintainandaugmentthestockwhichmaybereservedforimmediateconsumptionisthesoleendandpurposebothofthefixedandcirculatingcapitals。Itisthisstockwhichfeeds，clothes，andlodgesthepeople。Theirrichesorpovertydependsupontheabundantorsparingsupplieswhichthosetwocapitalscanaffordtothestockreservedforimmediateconsumption。
　　Sogreatapartofthecirculatingcapitalbeingcontinuallywithdrawnfromit，inordertobeplacedintheothertwobranchesofthegeneralstockofthesociety;itmustinitsturnrequirecontinualsupplies，withoutwhichitwouldsoonceasetoexist。Thesesuppliesareprincipallydrawnfromthreesources，theproduceofland，ofmines，andoffisheries。Theseaffordcontinualsuppliesofprovisionsandmaterials，ofwhichpartisafterwardswroughtupintofinishedwork，andbywhicharereplacedtheprovisions，materials，andfinishedworkcontinuallywithdrawnfromthecirculatingcapital。Frommines，too，isdrawnwhatisnecessaryformaintainingandaugmentingthatpartofitwhichconsistsinmoney。Forthough，intheordinarycourseofbusiness，thispartisnot，liketheotherthree，necessarilywithdrawnfromit，inordertobeplacedintheothertwobranchesofthegeneralstockofthesociety，itmust，however，likeallotherthings，bewastedandwornoutatlast，andsometimes，too，beeitherlostorsentabroad，andmust，therefore，requirecontinual，though，nodoubt，muchsmallersupplies。
　　Land，mines，andfisheries，requireallbothafixedandacirculatingcapitaltocultivatethem;andtheirproducereplaceswithaprofit，notonlythosecapitals，butalltheothersinthesociety。Thusthefarmerannuallyreplacestothemanufacturertheprovisionswhichhehadconsumedandthematerialswhichbehadwroughtuptheyearbefore;andthemanufacturerreplacestothefarmerthefinishedworkwhichhehadwastedandwornoutinthesametime。Thisistherealexchangethatisannuallymadebetweenthosetwoordersofpeople，thoughitseldomhappensthattherudeproduceoftheoneandthemanufacturedproduceoftheother，aredirectlybarteredforoneanother;becauseitseldomhappensthatthefarmersellshiscornandhiscattle，hisflaxandhiswool，totheverysamepersonofwhomhechoosestopurchasetheclothes，furniture，andinstrumentsoftradewhichhewants。Hesells，therefore，hisrudeproduceformoney，withwhichhecanpurchase，whereveritistobehad，themanufacturedproducehehasoccasionfor。Landevenreplaces，inpartatleast，thecapitalswithwhichfisheriesandminesarecultivated。Itistheproduceoflandwhichdrawsthefishfromthewaters;anditistheproduceofthesurfaceoftheearthwhichextractsthemineralsfromitsbowels。
　　Theproduceofland，mines，andfisheries，whentheirnaturalfertilityisequal，isinproportiontotheextentandproperapplicationofthecapitalsemployedaboutthem。Whenthecapitalsareequalandequallywellapplied，itisinproportiontotheirnaturalfertility。
　　Inallcountrieswherethereistolerablesecurity，everymanofcommonunderstandingwillendeavourtoemploywhateverstockhecancommandinprocuringeitherpresentenjoymentorfutureprofit。Ifitisemployedinprocuringpresentenjoyment，itisastockreservedforimmediateconsumption。Ifitisemployedinprocuringfutureprofit，itmustprocurethisprofiteitherstayingwithhim，orbygoingfromhim。Intheonecaseitisfixed，intheotheritisacirculatingcapital。Amanmustbeperfectlycrazywho，wherethereistolerablesecurity，doesnotemployallthestockwhichhecommands，whetherbehisownorborrowedofotherpeople，insomeoneorotherofthosethreeways。
　　Inthoseunfortunatecountries，indeed，wheremenarecontinuallyafraidoftheviolenceoftheirsuperiors，theyfrequentlyburyandconcealagreatpartoftheirstock，inordertohaveitalwaysathandtocarrywiththemtosomeplaceofsafety，incaseoftheirbeingthreatenedwithanyofthosedisasterstowhichtheyconsiderthemselvesasatalltimesexposed。ThisissaidtobeacommonpracticeinTurkey，inIndostan，and，Ibelieve，inmostothergovernmentsofAsia。Itseemstohavebeenacommonpracticeamongourancestorsduringtheviolenceofthefeudalgovernment。Treasure—trovewasinthosetimesconsideredasnocontemptiblepartoftherevenueofthegreatestsovereignsinEurope。Itconsistedinsuchtreasureaswasfoundconcealedintheearth，andtowhichnoparticularpersoncouldproveanyright。Thiswasregardedinthosetimesassoimportantanobject，thatitwasalwaysconsideredasbelongingtothesovereign，andneithertothefindernortotheproprietoroftheland，unlesstherighttoithadbeenconveyedtothelatterbyanexpressclauseinhischarter。Itwasputuponthesamefootingwithgoldandsilvermines，which，withoutaspecialclauseinthecharter，wereneversupposedtobecomprehendedinthegeneralgrantofthelands，thoughminesoflead，copper，tin，andcoalwereasthingsofsmallerconsequence。
　　CHAPTERII
　　OfMoneyconsideredasaparticularBranchofthegeneralStockoftheSociety，oroftheExpenseofmaintainingtheNationalCapitalIThasbeenshowninthefirstbook，thatthepriceofthegreaterpartofcommoditiesresolvesitselfintothreeparts，ofwhichonepaysthewagesofthelabour，anothertheprofitsofthestock，andathirdtherentofthelandwhichhadbeenemployedinproducingandbringingthemtomarket:thatthereare，indeed，somecommoditiesofwhichthepriceismadeupoftwoofthosepartsonly，thewagesoflabour，andtheprofitsofstock:andaveryfewinwhichitconsistsaltogetherinone，thewagesoflabour:butthatthepriceofeverycommoditynecessarilyresolvesitselfintosomeone，orother，orallofthesethreeparts;everypartofitwhichgoesneithertorentnortowages，beingnecessarilyprofittosomebody。
　　Sincethisisthecase，ithasbeenobserved，withregardtoeveryparticularcommodity，takenseparately，itmustbesowithregardtoallthecommoditieswhichcomposethewholeannualproduceofthelandandlabourofeverycountry，takencomplexly。
　　Thewholepriceorexchangeablevalueofthatannualproducemustresolveitselfintothesamethreeparts，andbeparcelledoutamongthedifferentinhabitantsofthecountry，eitherasthewagesoftheirlabour，theprofitsoftheirstock，ortherentoftheirland。
　　Butthoughthewholevalueoftheannualproduceofthelandandlabourofeverycountryisthusdividedamongandconstitutesarevenuetoitsdifferentinhabitants，yetasintherentofaprivateestatewedistinguishbetweenthegrossrentandthenetrent，somaywelikewiseintherevenueofalltheinhabitantsofagreatcountry。
　　Thegrossrentofaprivateestatecomprehendswhateverispaidbythefarmer;thenetrent，whatremainsfreetothelandlord，afterdeductingtheexpenseofmanagement，ofrepairs，andallothernecessarycharges;orwhat，withouthurtinghisestate，hecanaffordtoplaceinhisstockreservedforimmediateconsumption，ortospenduponhistable，equipage，theornamentsofhishouseandfurniture，hisprivateenjoymentsandamusements。Hisrealwealthisinproportion，nottohisgross，buttohisnetrent。
　　Thegrossrevenueofalltheinhabitantsofagreatcountrycomprehendsthewholeannualproduceoftheirlandandlabour;
　　thenetrevenue，whatremainsfreetothemafterdeductingtheexpenseofmaintaining—first，theirfixed，and，secondly，theircirculatingcapital;orwhat，withoutencroachingupontheircapital，theycanplaceintheirstockreservedforimmediateconsumption，orspendupontheirsubsistence，conveniencies，andamusements。Theirrealwealth，too，isinproportion，nottotheirgross，buttotheirnetrevenue。
　　Thewholeexpenseofmaintainingthefixedcapitalmustevidentlybeexcludedfromthenetrevenueofthesociety。
　　Neitherthematerialsnecessaryforsupportingtheirusefulmachinesandinstrumentsoftrade，theirprofitablebuildings，etc。，northeproduceofthelabournecessaryforfashioningthosematerialsintotheproperform，canevermakeanypartofit。Thepriceofthatlabourmayindeedmakeapartofit;astheworkmensoemployedmayplacethewholevalueoftheirwagesintheirstockreservedforimmediateconsumption。Butinothersortsoflabour，boththepriceandtheproducegotothisstock，thepricetothatoftheworkmen，theproducetothatofotherpeople，whosesubsistence，conveniences，andamusements，areaugmentedbythelabourofthoseworkmen。
　　Theintentionofthefixedcapitalistoincreasetheproductivepowersoflabour，ortoenablethesamenumberoflabourerstoperformamuchgreaterquantityofwork。Inafarmwhereallthenecessarybuildings，fences，drains，communications，etc。，areinthemostperfectgoodorder，thesamenumberoflabourersandlabouringcattlewillraiseamuchgreaterproducethaninoneofequalextentandequallygoodground，butnotfurnishedwithequalconveniencies。Inmanufacturesthesamenumberofhands，assistedwiththebestmachinery，willworkupamuchgreaterquantityofgoodsthanwithmoreimperfectinstrumentsoftrade。Theexpensewhichisproperlylaidoutuponafixedcapitalofanykind，isalwaysrepaidwithgreatprofit，andincreasestheannualproducebyamuchgreatervaluethanthatofthesupportwhichsuchimprovementsrequire。Thissupport，however，stillrequiresacertainportionofthatproduce。Acertainquantityofmaterials，andthelabourofacertainnumberofworkmen，bothofwhichmighthavebeenimmediatelyemployedtoaugmentthefood，clothingandlodging，thesubsistenceandconvenienciesofthesociety，arethusdivertedtoanotheremployment，highlyadvantageousindeed，butstilldifferentfromthisone。Itisuponthisaccountthatallsuchimprovementsinmechanics，asenablethesamenumberofworkmentoperformanequalquantityofwork，withcheaperandsimplermachinerythanhadbeenusualbefore，arealwaysregardedasadvantageoustoeverysociety。A
　　certainquantityofmaterials，andthelabourofacertainnumberofworkmen，whichhadbeforebeenemployedinsupportingamorecomplexandexpensivemachinery，canafterwardsbeappliedtoaugmentthequantityofworkwhichthatoranyothermachineryisusefulonlyforperforming。Theundertakerofsomegreatmanufactorywhoemploysathousandayearinthemaintenanceofhismachinery，ifhecanreducethisexpensetofivehundredwillnaturallyemploytheotherfivehundredinpurchasinganadditionalquantityofmaterialstobewroughtupbyanadditionalnumberofworkmen。Thequantityofthatwork，therefore，whichhismachinerywasusefulonlyforperforming，willnaturallybeaugmented，andwithitalltheadvantageandconveniencywhichthesocietycanderivefromthatwork。
　　Theexpenseofmaintainingthefixedcapitalinagreatcountrymayveryproperlybecomparedtothatofrepairsinaprivateestate。Theexpenseofrepairsmayfrequentlybenecessaryforsupportingtheproduceoftheestate，andconsequentlyboththegrossandthenetrentofthelandlord。
　　Whenbyamoreproperdirection，however，itcanbediminishedwithoutoccasioninganydiminutionofproduce，thegrossrentremainsatleastthesameasbefore，andthenetrentisnecessarilyaugmented。
　　Butthoughthewholeexpenseofmaintainingthefixedcapitalisthusnecessarilyexcludedfromthenetrevenueofthesociety，itisnotthesamecasewiththatofmaintainingthecirculatingcapital。Ofthefourpartsofwhichthislattercapitaliscomposed—money，provisions，materials，andfinishedwork—thethreelast，ithasalreadybeenobserved，areregularlywithdrawnfromit，andplacedeitherinthefixedcapitalofthesociety，orintheirstockreservedforimmediateconsumption。
　　Whateverportionofthoseconsumablegoodsisemployedinmaintainingtheformer，goesalltothelatter，andmakesapartofthenetrevenueofthesociety。Themaintenanceofthosethreepartsofthecirculatingcapital，therefore，withdrawsnoportionoftheannualproducefromthenetrevenueofthesociety，besideswhatisnecessaryformaintainingthefixedcapital。
　　Thecirculatingcapitalofasocietyisinthisrespectdifferentfromthatofanindividual。Thatofanindividualistotallyexcludedfrommakinganypartofhisnetrevenue，whichmustconsistaltogetherinhisprofits。Butthoughthecirculatingcapitalofeveryindividualmakesapartofthatofthesocietytowhichhebelongs，itisnotuponthataccounttotallyexcludedfrommakingapartlikewiseoftheirnetrevenue。Thoughthewholegoodsinamerchant’sshopmustbynomeansbeplacedinhisownstockreservedforimmediateconsumption，theymayinthatofotherpeople，who，fromarevenuederivedfromotherfunds，mayregularlyreplacetheirvaluetohim，togetherwithitsprofits，withoutoccasioninganydiminutioneitherofhiscapitaloroftheirs。
　　Money，therefore，istheonlypartofthecirculatingcapitalofasociety，ofwhichthemaintenancecanoccasionanydiminutionintheirnetrevenue。
　　Thefixedcapital，andthatpartofthecirculatingcapitalwhichconsistsinmoney，sofarastheyaffecttherevenueofthesociety，bearaverygreatresemblancetooneanother。
　　First，asthosemachinesandinstrumentsoftrade，etc。，requireacertainexpense，firsttoerectthem，andafterwardstosupportthem，bothwhichexpenses，thoughtheymakeapartofthegross，aredeductionsfromthenetrevenueofthesociety;sothestockofmoneywhichcirculatesinanycountrymustrequireacertainexpense，firsttocollectit，andafterwardstosupportit，bothwhichexpenses，thoughtheymakeapartofthegross，are，inthesamemanner，deductionsfromthenetrevenueofthesociety。Acertainquantityofveryvaluablematerials，goldandsilver，andofverycuriouslabour，insteadofaugmentingthestockreservedforimmediateconsumption，thesubsistence，conveniencies，andamusementsofindividuals，isemployedinsupportingthatgreatbutexpensiveinstrumentofcommerce，bymeansofwhicheveryindividualinthesocietyhashissubsistence，conveniencies，andamusementsregularlydistributedtohimintheirproperproportions。
　　Secondly，asthemachinesandinstrumentsofatrade，etc。，whichcomposethefixedcapitaleitherofanindividualorofasociety，makenoparteitherofthegrossorofthenetrevenueofeither;somoney，bymeansofwhichthewholerevenueofthesocietyisregularlydistributedamongallitsdifferentmembers，makesitselfnopartofthatrevenue。Thegreatwheelofcirculationisaltogetherdifferentfromthegoodswhicharecirculatedbymeansofit。Therevenueofthesocietyconsistsaltogetherinthosegoods，andnotinthewheelwhichcirculatesthem。Incomputingeitherthegrossorthenetrevenueofanysociety，wemustalways，fromtheirwholeannualcirculationofmoneyandgoods，deductthewholevalueofthemoney，ofwhichnotasinglefarthingcanevermakeanypartofeither。
　　Itistheambiguityoflanguageonlywhichcanmakethispropositionappeareitherdoubtfulorparadoxical。Whenproperlyexplainedandunderstood，itisalmostself—evident。
　　Whenwetalkofanyparticularsumofmoney，wesometimesmeannothingbutthemetalpiecesofwhichitiscomposed;andsometimesweincludeinourmeaningsomeobscurereferencetothegoodswhichcanbehadinexchangeforit，ortothepowerofpurchasingwhichthepossessionofitconveys。ThuswhenwesaythatthecirculatingmoneyofEnglandhasbeencomputedateighteenmillions，wemeanonlytoexpresstheamountofthemetalpieces，whichsomewritershavecomputed，orratherhavesupposedtocirculateinthatcountry。Butwhenwesaythatamanisworthfiftyorahundredpoundsayear，wemeancommonlytoexpressnotonlytheamountofthemetalpieceswhichareannuallypaidtohim，butthevalueofthegoodswhichhecanannuallypurchaseorconsume。Wemeancommonlytoascertainwhatisoroughttobehiswayofliving，orthequantityandqualityofthenecessariesandconvenienciesoflifeinwhichhecanwithproprietyindulgehimself。
　　When，byanyparticularsumofmoney，wemeannotonlytoexpresstheamountofthemetalpiecesofwhichitiscomposed，buttoincludeinitssignificationsomeobscurereferencetothegoodswhichcanbehadinexchangeforthem，thewealthorrevenuewhichitinthiscasedenotes，isequalonlytooneofthetwovalueswhicharethusintimatedsomewhatambiguouslybythesameword，andtothelattermoreproperlythantotheformer，tothemoney’sworthmoreproperlythantothemoney。
　　Thusifaguineabetheweeklypensionofaparticularperson，hecaninthecourseoftheweekpurchasewithitacertainquantityofsubsistence，conveniencies，andamusements。
　　Inproportionasthisquantityisgreatorsmall，soarehisrealriches，hisrealweeklyrevenue。Hisweeklyrevenueiscertainlynotequalbothtotheguinea，andtowhatcanbepurchasedwithit，butonlytooneorotherofthosetwoequalvalues;andtothelattermoreproperlythantotheformer，totheguinea’sworthratherthantotheguinea。
　　Ifthepensionofsuchapersonwaspaidtohim，notingold，butinaweeklybillforaguinea，hisrevenuesurelywouldnotsoproperlyconsistinthepieceofpaper，asinwhathecouldgetforit。Aguineamaybeconsideredasabillforacertainquantityofnecessariesandconvenienciesuponallthetradesmenintheneighbourhood。Therevenueofthepersontowhomitispaid，doesnotsoproperlyconsistinthepieceofgold，asinwhathecangetforit，orinwhathecanexchangeitfor。Ifitcouldbeexchangedfornothing，itwould，likeabilluponabankrupt，beofnomorevaluethanthemostuselesspieceofpaper。
　　Thoughtheweeklyoryearlyrevenueofallthedifferentinhabitantsofanycountry，inthesamemanner，maybe，andinrealityfrequentlyispaidtotheminmoney，theirrealriches，however，therealweeklyoryearlyrevenueofallofthemtakentogether，mustalwaysbegreatorsmallinproportiontothequantityofconsumablegoodswhichtheycanallofthempurchasewiththismoney。Thewholerevenueofallofthemtakentogetherisevidentlynotequaltoboththemoneyandtheconsumablegoods;butonlytooneorotherofthosetwovalues，andtothelattermoreproperlythantotheformer。
　　Thoughwefrequently，therefore，expressaperson’srevenuebythemetalpieceswhichareannuallypaidtohim，itisbecausetheamountofthosepiecesregulatestheextentofhispowerofpurchasing，orthevalueofthegoodswhichhecanannuallyaffordtoconsume。Westillconsiderhisrevenueasconsistinginthispowerofpurchasingorconsuming，andnotinthepieceswhichconveyit。
　　Butifthisissufficientlyevidentevenwithregardtoanindividual，itisstillmoresowithregardtoasociety。Theamountofthemetalpieceswhichareannuallypaidtoanindividual，isoftenpreciselyequaltohisrevenue，andisuponthataccounttheshortestandbestexpressionofitsvalue。Buttheamountofthemetalpieceswhichcirculateinasocietycanneverbeequaltotherevenueofallitsmembers。Asthesameguineawhichpaystheweeklypensionofonemanto—day，maypaythatofanotherto—morrow，andthatofathirdthedaythereafter，theamountofthemetalpieceswhichannuallycirculateinanycountrymustalwaysbeofmuchlessvaluethanthewholemoneypensionsannuallypaidwiththem。Butthepowerofpurchasing，orthegoodswhichcansuccessivelybeboughtwiththewholeofthosemoneypensionsastheyaresuccessivelypaid，mustalwaysbepreciselyofthesamevaluewiththosepensions;
　　asmustlikewisebetherevenueofthedifferentpersonstowhomtheyarepaid。Thatrevenue，therefore，cannotconsistinthosemetalpieces，ofwhichtheamountissomuchinferiortoitsvalue，butinthepowerofpurchasing，inthegoodswhichcansuccessivelybeboughtwiththemastheycirculatefromhandtohand。
　　Money，therefore，thegreatwheelofcirculation，thegreatinstrumentofcommerce，likeallotherinstrumentsoftrade，thoughitmakesapartandaveryvaluablepartofthecapital，makesnopartoftherevenueofthesocietytowhichitbelongs;
　　andthoughthemetalpiecesofwhichitiscomposed，inthecourseoftheirannualcirculation，distributetoeverymantherevenuewhichproperlybelongstohim，theymakethemselvesnopartofthatrevenue。
　　Thirdly，andlastly，themachinesandinstrumentsoftrade，etc。，whichcomposethefixedcapital，bearthisfurtherresemblancetothatpartofthecirculatingcapitalwhichconsistsinmoney;thataseverysavingintheexpenseoferectingandsupportingthosemachines，whichdoesnotdiminishtheproductivepowersoflabour，isanimprovementofthenetrevenueofthesociety，soeverysavingintheexpenseofcollectingandsupportingthatpartofthecirculatingcapitalwhichconsistsinmoney，isanimprovementofexactlythesamekind。
　　Itissufficientlyobvious，andithaspartly，too，beenexplainedalready，inwhatmannereverysavingintheexpenseofsupportingthefixedcapitalisanimprovementofthenetrevenueofthesociety。Thewholecapitaloftheundertakerofeveryworkisnecessarilydividedbetweenhisfixedandhiscirculatingcapital。Whilehiswholecapitalremainsthesame，thesmallertheonepart，thegreatermustnecessarilybetheother。Itisthecirculatingcapitalwhichfurnishesthematerialsandwagesoflabour，andputsindustryintomotion。Everysaving，therefore，intheexpenseofmaintainingthefixedcapital，whichdoesnotdiminishtheproductivepowersoflabour，mustincreasethefundwhichputsindustryintomotion，andconsequentlytheannualproduceoflandandlabour，therealrevenueofeverysociety。
　　Thesubstitutionofpaperintheroomofgoldandsilvermoney，replacesaveryexpensiveinstrumentofcommercewithonemuchlesscostly，andsometimesequallyconvenient。Circulationcomestobecarriedonbyanewwheel，whichitcostslessbothtoerectandtomaintainthantheoldone。Butinwhatmannerthisoperationisperformed，andinwhatmannerittendstoincreaseeitherthegrossorthenetrevenueofthesociety，isnotaltogethersoobvious，andmaythereforerequiresomefurtherexplication。
　　Thereareseveraldifferentsortsofpapermoney;butthecirculatingnotesofbanksandbankersarethespecieswhichisbestknown，andwhichseemsbestadaptedforthispurpose。
　　Whenthepeopleofanyparticularcountryhavesuchconfidenceinthefortune，probity，andprudenceofaparticularbanker，astobelievethatheisalwaysreadytopayupondemandsuchofhispromissorynotesasarelikelytobeatanytimepresentedtohim;thosenotescometohavethesamecurrencyasgoldandsilvermoney，fromtheconfidencethatsuchmoneycanatanytimebehadforthem。
　　Aparticularbankerlendsamonghiscustomershisownpromissorynotes，totheextent，weshallsuppose，ofahundredthousandpounds。Asthosenotesserveallthepurposesofmoney，hisdebtorspayhimthesameinterestasifhehadlentthemsomuchmoney。Thisinterestisthesourceofhisgain。Thoughsomeofthosenotesarecontinuallycomingbackuponhimforpayment，partofthemcontinuetocirculateformonthsandyearstogether。
　　Thoughhehasgenerallyincirculation，therefore，notestotheextentofahundredthousandpounds，twentythousandpoundsingoldandsilvermayfrequentlybeasufficientprovisionforansweringoccasionaldemands。Bythisoperation，therefore，twentythousandpoundsingoldandsilverperformallthefunctionswhichahundredthousandcouldotherwisehaveperformed。Thesameexchangesmaybemade，thesamequantityofconsumablegoodsmaybecirculatedanddistributedtotheirproperconsumers，bymeansofhispromissorynotes，tothevalueofahundredthousandpounds，asbyanequalvalueofgoldandsilvermoney。Eightythousandpoundsofgoldandsilver，therefore，can，inthismanner，besparedfromthecirculationofthecountry;andifdifferentoperationsofthesamekindshould，atthesametime，becarriedonbymanydifferentbanksandbankers，thewholecirculationmaythusbeconductedwithafifthpartonlyofthegoldandsilverwhichwouldotherwisehavebeenrequisite。
　　Letussuppose，forexample，thatthewholecirculatingmoneyofsomeparticularcountryamounted，ataparticulartime，toonemillionsterling，thatsumbeingthensufficientforcirculatingthewholeannualproduceoftheirlandandlabour。
　　Letussuppose，too，thatsometimethereafter，differentbanksandbankersissuedpromissorynotes，payabletothebearer，totheextentofonemillion，reservingintheirdifferentcofferstwohundredthousandpoundsforansweringoccasionaldemands。
　　Therewouldremain，therefore，incirculation，eighthundredthousandpoundsingoldandsilver，andamillionofbanknotes，oreighteenhundredthousandpoundsofpaperandmoneytogether。
　　Buttheannualproduceofthelandandlabourofthecountryhadbeforerequiredonlyonemilliontocirculateanddistributeittoitsproperconsumers，andthatannualproducecannotbeimmediatelyaugmentedbythoseoperationsofbanking。Onemillion，therefore，willbesufficienttocirculateitafterthem。Thegoodstobeboughtandsoldbeingpreciselythesameasbefore，thesamequantityofmoneywillbesufficientforbuyingandsellingthem。Thechannelofcirculation，ifImaybeallowedsuchanexpression，willremainpreciselythesameasbefore。Onemillionwehavesupposedsufficienttofillthatchannel。
　　Whatever，therefore，ispouredintoitbeyondthissumcannotruninit，butmustoverflow。Onemillioneighthundredthousandpoundsarepouredintoit。Eighthundredthousandpounds，therefore，mustoverflow，thatsumbeingoverandabovewhatcanbeemployedinthecirculationofthecountry。Butthoughthissumcannotbeemployedathome，itistoovaluabletobeallowedtolieidle。Itwill，therefore，besentabroad，inordertoseekthatprofitableemploymentwhichitcannotfindathome。Butthepapercannotgoabroad;becauseatadistancefromthebankswhichissueit，andfromthecountryinwhichpaymentofitcanbeexactedbylaw，itwillnotbereceivedincommonpayments。
　　Goldandsilver，therefore，totheamountofeighthundredthousandpoundswillbesentabroad，andthechannelofhomecirculationwillremainfilledwithamillionofpaper，insteadofthemillionofthosemetalswhichfilleditbefore。
　　Butthoughsogreataquantityofgoldandsilveristhussentabroad，wemustnotimaginethatitissentabroadfornothing，orthatitsproprietorsmakeapresentofittoforeignnations。Theywillexchangeitforforeigngoodsofsomekindoranother，inordertosupplytheconsumptioneitherofsomeotherforeigncountryoroftheirown。
　　Iftheyemployitinpurchasinggoodsinoneforeigncountryinordertosupplytheconsumptionofanother，orinwhatiscalledthecarryingtrade，whateverprofittheymakewillbeanadditiontothenetrevenueoftheirowncountry。Itislikeanewfund，createdforcarryingonanewtrade;domesticbusinessbeingnowtransactedbypaper，andthegoldandsilverbeingconvertedintoafundforthisnewtrade。
　　Iftheyemployitinpurchasingforeigngoodsforhomeconsumption，theymayeither，first，purchasesuchgoodsasarelikelytobeconsumedbyidlepeoplewhoproducenothing，suchasforeignwines，foreignsilks，etc。;or，secondly，theymaypurchaseanadditionalstockofmaterials，tools，andprovisions，inordertomaintainandemployanadditionalnumberofindustriouspeople，whoreproduce，withaprofit，thevalueoftheirannualconsumption。
　　Sofarasitisemployedinthefirstway，itpromotesprodigality，increasesexpenseandconsumptionwithoutincreasingproduction，orestablishinganypermanentfundforsupportingthatexpense，andisineveryrespecthurtfultothesociety。
　　Sofarasitisemployedinthesecondway，itpromotesindustry;andthoughitincreasestheconsumptionofthesociety，itprovidesapermanentfundforsupportingthatconsumption，thepeoplewhoconsumereproducing，withaprofit，thewholevalueoftheirannualconsumption。Thegrossrevenueofthesociety，theannualproduceoftheirlandandlabour，isincreasedbythewholevaluewhichthelabourofthoseworkmenaddstothematerialsuponwhichtheyareemployed;andtheirnetrevenuebywhatremainsofthisvalue，afterdeductingwhatisnecessaryforsupportingthetoolsandinstrumentsoftheirtrade。
　　Thatthegreaterpartofthegoldandsilverwhich，beingforcedabroadbythoseoperationsofbanking，isemployedinpurchasingforeigngoodsforhomeconsumption，isandmustbeemployedinpurchasingthoseofthissecondkind，seemsnotonlyprobablebutalmostunavoidable。Thoughsomeparticularmenmaysometimesincreasetheirexpenseveryconsiderablythoughtheirrevenuedoesnotincreaseatall，wemaybeassuredthatnoclassororderofmeneverdoesso;because，thoughtheprinciplesofcommonprudencedonotalwaysgoverntheconductofeveryindividual，theyalwaysinfluencethatofthemajorityofeveryclassororder。Buttherevenueofidlepeople，consideredasaclassororder，cannot，inthesmallestdegree，beincreasedbythoseoperationsofbanking。Theirexpenseingeneral，therefore，cannotbemuchincreasedbythem，thoughthatofafewindividualsamongthemmay，andinrealitysometimesis。Thedemandofidlepeople，therefore，forforeigngoodsbeingthesame，orverynearlythesame，asbefore，averysmallpartofthemoney，whichbeingforcedabroadbythoseoperationsofbanking，isemployedinpurchasingforeigngoodsforhomeconsumption，islikelytobeemployedinpurchasingthosefortheiruse。Thegreaterpartofitwillnaturallybedestinedfortheemploymentofindustry，andnotforthemaintenanceofidleness。
　　Whenwecomputethequantityofindustrywhichthecirculatingcapitalofanysocietycanemploy，wemustalwayshaveregardtothosepartsofitonlywhichconsistinprovisions，materials，andfinishedwork:theother，whichconsistsinmoney，andwhichservesonlytocirculatethosethree，mustalwaysbededucted。Inordertoputindustryintomotion，threethingsarerequisite;materialstoworkupon，toolstoworkwith，andthewagesorrecompenseforthesakeofwhichtheworkisdone。Moneyisneitheramaterialtoworkupon，noratooltoworkwith;andthoughthewagesoftheworkmanarecommonlypaidtohiminmoney，hisrealrevenue，likethatofallothermen，consists，notinmoney，butinthemoney’sworth;notinthemetalpieces，butinwhatcanbegotforthem。
　　Thequantityofindustrywhichanycapitalcanemploymust，evidently，beequaltothenumberofworkmenwhomitcansupplywithmaterials，tools，andamaintenancesuitabletothenatureofthework。Moneymayberequisiteforpurchasingthematerialsandtoolsofthework，aswellasthemaintenanceoftheworkmen。
　　Butthequantityofindustrywhichthewholecapitalcanemployiscertainlynotequalbothtothemoneywhichpurchases，andtothematerials，tools，andmaintenance，whicharepurchasedwithit;butonlytooneorotherofthosetwovalues，andtothelattermoreproperlythantotheformer。
　　Whenpaperissubstitutedintheroomofgoldandsilvermoney，thequantityofthematerials，tools，andmaintenance，whichthewholecirculatingcapitalcansupply，maybeincreasedbythewholevalueofgoldandsilverwhichusedtobeemployedinpurchasingthem。Thewholevalueofthegreatwheelofcirculationanddistributionisaddedtothegoodswhicharecirculatedanddistributedbymeansofit。Theoperation，insomemeasure，resemblesthatoftheundertakerofsomegreatwork，who，inconsequenceofsomeimprovementinmechanics，takesdownhisoldmachinery，andaddsthedifferencebetweenitspriceandthatofthenewtohiscirculatingcapital，tothefundfromwhichhefurnishesmaterialsandwagestohisworkmen。
　　Whatistheproportionwhichthecirculatingmoneyofanycountrybearstothewholevalueoftheannualproducecirculatedbymeansofit，itis，perhaps，impossibletodetermine。Ithasbeencomputedbydifferentauthorsatafifth，atatenth，atatwentieth，andatathirtiethpartofthatvalue。Buthowsmallsoevertheproportionwhichthecirculatingmoneymaybeartothewholevalueoftheannualproduce，asbutapart，andfrequentlybutasmallpart，ofthatproduce，iseverdestinedforthemaintenanceofindustry，itmustalwaysbearaveryconsiderableproportiontothatpart。When，therefore，bythesubstitutionofpaper，thegoldandsilvernecessaryforcirculationisreducedto，perhaps，afifthpartoftheformerquantity，ifthevalueofonlythegreaterpartoftheotherfour—fifthsbeaddedtothefundswhicharedestinedforthemaintenanceofindustry，itmustmakeaveryconsiderableadditiontothequantityofthatindustry，and，consequently，tothevalueoftheannualproduceoflandandlabour。