Residence of Capitals Used in Different Employments

¹³ The agricultural and retail capital of any society must always reside within that society.

Their employment is confined to a precise spot, to the farm and to the retailer’s shop. They must generally belong to the residents.

¹⁴ The wholesale merchant’s capital has no fixed residence anywhere.

It may wander about according as it can buy cheap or sell dear.

¹⁵ The manufacturer’s capital must reside where the manufacture is done.

This place is not always determined.

It may be far from where the materials grow and from where the finished product is consumed.

Lyons is very distant from the source of raw materials and from its consumers.

The people of fashion in Sicily are clothed in silks from overseas which they process locally.

Part of the wool of Spain is manufactured in Great Britain.

Some part of that cloth is then sent back to Spain.

¹⁶ It is not important whether the merchant exporter is a native or a foreigner.

If he is a foreigner, the number of foreign productive labourers will be less by one man. only than if he had been a native.

The difference of the value of their annual produce will be determined by the profits of that one man.

The sailors or carriers he employs may still belong to whatever country.

The capital of a foreigner gives a value to their surplus produce equally with that of a native.

His capital buys surplus produce in demand at home.

It replaces the capital of the person who produces that surplus and enables him to continue his business.

This is how the merchant’s capital chiefly supports productive labour.

It increases the value of the annual produce of his society.

¹⁷ It is of more consequence that the capital of the manufacturer should reside within the country.

It mobilizes more productive labour, and adds a greater value to the national annual produce. It may, however, be very useful to the country that it should reside overseas.

The capitals of the British manufacturers who process the flax and hemp imported from the Baltic coasts are very useful to the countries which produce them.

Those raw materials are part of the surplus produce of those countries which would otherwise be of no value, and would not be produced.

The merchants who export those raw materials replace the capitals of the producers and encourage them to continue production.

The British manufacturers who buy those raw materials replace the capitals of those merchants.

¹⁸ A country, like a person, may frequently not have capital sufficient=

• to improve and cultivate all its lands
• to manufacture or process their rude produce for immediate use and consumption
• to transport their surplus produce to distant markets.

All the British do not not capital sufficient to improve and cultivate all their lands. Most of the wool of southern Scotland is manufactured far in Yorkshire through bad roads because of the lack of capital to manufacture it at home.

There are many little manufacturing towns in Great Britain. Its inhabitants do not have the capital to transport their produce to distant markets where there is demand for it. The only merchants among them are the agents of wealthier merchants residing in the greater commercial cities.

¹⁹ When the capital of any country is employed largely in agriculture, more productive labour will be mobilized within the country and increase the value it adds to the national annual produce.

After agriculture, the capital employed in manufactures mobilizes the most productive labour.

It adds the greatest value to the annual produce.

The capital employed in exportation has the least effect of the three.

²⁰ The country which has insufficient capital for all those three purposes has not reached opulence.

Prematurely attempting to do all three with insufficient capital is certainly not the shortest way for a society to acquire a sufficient capital, no more than it would be for an individual.

The capital of all the members of society has its limits in the same way as the capital of a single individual. It is increased by their continual accumulation and savings out of their revenue.

The national capital is likely to increase fastest when it brings greatest revenue to all its citizens. This will enable them to make the greatest savings.

But the revenue of all its citizens is in proportion to the value of the national annual produce.

²¹ Our American colonies progress rapidly towards wealth mainly because almost all their capitals are employed in agriculture.

• They have no manufactures except the household and course manufactures.
• These accompany the progress of agriculture.
• These are the work of the women and children in every private family.

Most of the exportation and coasting trade of America is done by the capitals of merchants living in Great Britain.

Many of the stores and warehouses used in retail, particularly in Virginia and Maryland, belong to British merchants.

It is one of the few examples of local retail being carried on by the capitals of non-residents.

If the Americans stop imports of European manufactures by combination or violence, they would:

• give a monopoly to the Americans who could manufacture similar goods,
• divert American capital into manufacturing,
• retard the increase in the value of their annual produce,
• obstruct the progress of their country towards real wealth and greatness.

This and much worse would also happen if the Americans monopolized their entire exports to themselves.

²² Human prosperity has never lasted long enough to enable any great country to acquire capital for all those 3 purposes.

Perhaps only the following have been wealthy and cultivated enough to do this:

• China
• ancient Egypt
• ancient India

Even those three countries are chiefly renowned for their agriculture and manufactures, not for foreign trade.

• The ancient Egyptians and the Indians had a superstitious antipathy to the sea.
• The Chinese have never excelled in foreign commerce.

Most of the surplus produce of those three countries were always exported by foreigners who gave gold and silver for their surplus produce.

²³ In any country, the same capital will mobilize varying amounts of productive labour.

It will add a varying value to the national annual produce, according to the proportions of it employed in:

• agriculture
• manufactures
• wholesale trade

This variation can be very big depending on the kinds of wholesale trade it is employed in.