The Four Employment of capitals

¹ The destiny of all capitals is to maintain productive labour.

But the amount of that labour varies extremely according to:

• the diversity of their employment and
• the value it adds to the national annual produce.

² A capital may be employed in 4 ways:

1. In procuring the rude produce required for society’s use and consumption

• Examples are the capitals used in improving or cultivating lands, mines, or fisheries

2. In manufacturing and preparing that rude produce for immediate use and consumption

• Examples are the capitals of all master manufacturers

3. In transporting the rude or manufactured produce from where they abound to where they are wanted

• Examples are the capitals of all wholesale merchants

4. In dividing portions of rude or manufactured produce into small parcels for those who want them.

• Examples are the capitals of all retailers

It is difficult to conceive any other way that a capital can be employed other than those four.

³ Each of these 4 methods is needed by the other three, or to the conveniency of society.

⁴ Unless capital was employed to multiply rude produce, neither manufactures nor trade could exist.

⁵ Unless capital was employed in processing rude produce for use and consumption, it would never be produced because there could be no demand for such rude produce.

If it was produced spontaneously, it would be of no value.

⁶ Unless capital was employed to transport rude or manufactured produce to where it is wanted, no more could be produced than was necessary for the consumption of its neighbourhood.

The merchant’s capital exchanges the surplus produce of one place for that of another.

• It encourages industry and increases the enjoyments of both places.

⁷ Unless capital were used to divide those produce into small parcels, everyone would need to buy more than needed.

If there were no butchers, every man would need to buy a whole ox or sheep at a time.

• This would be inconvenient to the rich and more inconvenient to the poor.

If a poor worker were obliged to buy a month’s provisions at a time, most his capital would be forced into his stock for immediate consumption, which yields him no revenue.

• It is most convenient for him to buy them daily or hourly as needed.
• This allows him to employ more of his stock as a capital and furnish work of a greater value.
• The profit he makes in this way will more than compensate the added price that the retailer imposes on those smaller goods.

The prejudices of some political writers against shopkeepers and tradesmen are unfounded.

• It is unnecessary to tax them or restrict their numbers so that they can never multiply to hurt the public.
• They may hurt one another by their multiplication.

The amount of grocery goods which can be sold in a town, is limited by the demand of that town and its neighbourhood.

The capital, which can be employed in the grocery trade cannot exceed what is enough to buy that amount.

• If this capital is divided between two grocers, their competition will make them sell cheaper than if it were with just one.
• If it were divided among 20, their competition would be much greater.
  • The chance of them combining to raise the price would be much less.
  • Their competition might perhaps ruin some of themselves.

But it is their business to take care of this.

• It may safely be trusted to their discretion.
• It can never hurt the consumer or the producer.
• It will make the retailers sell cheaper and buy dearer than if the whole trade was monopolized by one or two persons.

Some of them may sometimes decoy a weak customer to buy what he does not need. However, this evil is of too little importance to deserve the public attention.

It would not be prevented by restricting their numbers.

It is not the multitude of ale-houses that causes drunkenness among common people.

Drunkeness from other causes creates a multitude of ale-houses.

⁸ People who employ their capitals in any of those 4 ways are themselves productive labourers.

Their labour realizes itself in a vendible commodity.

It adds to its price the value of their own maintenance and consumption at least.

The profits of the farmer, manufacturer, merchant, and retailer, are all drawn from the price of the goods which the farmer and manufacturer produce and the merchant and retailer trade.

However, equal capitals employed in those 4 ways, will immediately mobilize very different amounts of productive labour and increase the value of their national annual produce in very different proportions.