Chap 1b: Three Divisions of Stock

11 The general stock of any country or society is the same with that of all its inhabitants.

  • It naturally divides itself into the same three portions, each with a distinct function.


First Division of Stock

12 The first is the part reserved for immediate consumption.

  • It affords no revenue or profit.
  • It consists in the stock of food, clothes, furniture, etc. which have been bought but not yet entirely consumed.

The whole stock of houses makes a part of this first division.

  • The stock laid out in a house ceases from being a capital or from affording any revenue.
  • A house contributes nothing to its inhabitant’s revenue, though it is extremely useful to him.
  • If it is rented out, the tenant must always pay the rent ultimately from the revenue from his labour, stock, or land.
    • A house may yield a revenue to its owner and serve as his capital, but it cannot yield any revenue to the public.
    • The public revenue can never be increased by it.

Clothes and furniture sometimes yield a revenue and become capital.

  • In countries where masquerades are common, masquerade dresses are rented out for a night.
  • Upholsterers rent out furniture monthly or annually.
    • Undertakers rent out the furniture of funerals daily or weekly.
  • Many people rent out furnished houses.
  • The rent revenue must always be ultimately drawn from some other source of revenue.

Of all parts of individual or societal stock reserved for immediate consumption, those laid out in houses is most slowly consumed.

  • A stock of clothes may last several years.
  • A stock of furniture 50-100 years.
  • A stock of houses, well built and properly taken care of, may last many centuries.
    • Their total consumption lasts longer.
    • But they are still a stock reserved for immediate consumption as clothes or furniture.


Second Division of Stock

13 The second division is the fixed capital.

  • It affords a profit without circulating or changing masters.
  • It consists chiefly of four articles:
  1. 14 All useful machines and tools which facilitate and abridge labour.
  1. 15 All those profitable buildings which produce a revenue for:
    • their proprietor who rents them out, and
    • their tenants who use them as shops, warehouses, workhouses, farmhouses, stables, granaries, etc.
      • Unlike mere dwelling houses, these are instruments of trade.
  1. 16 The land improvements in clearing, draining, enclosing, manuring, and rendering it proper for tillage and culture.
    • An improved farm is the same as those useful machines which facilitate and abridge labour.
      • It allows an equal circulating capital to afford more revenue to its employer.
      • It is equally advantageous and more durable than any of those machines.
      • Its frequent cultivation are the only repairs it needs.
  1. 17 The useful abilities of everyone in society.
    • The acquisition of such talents always costs the maintenance of the learner during his education.
      • It is a capital fixed and realized in his person.
    • Those talents form part of his fortune and the fortune of the society he belongs to.
      • The improved dexterity of a worker is the same as a machine which facilitates and abridges labour.
      • It has a cost which it repays with a profit.


Third Division of Stock

18 The third and last division is the circulating capital.

  • It only affords a revenue by circulating or changing masters.
  • It is composed of four parts:
  1. 19 The money which circulates and distributes the three other stocks to their proper consumers.
  2. 20 The stock of provisions owned by the butcher, farmer, corn-merchant, brewer, etc.
    • They from the sale of such stock.
  3. 21 The unfinished products (clothes, furniture, and building) which remain with the growers, manufacturers, drapers, timber merchants, carpenters and joiners, brick-makers, etc.
  4. 22 The finished products still with the merchant or manufacturer and not yet disposed of or distributed to the proper consumers.
    • Examples are the finished work in the shops of the smith, cabinet-maker, goldsmith, jeweller, china-merchant, etc.
    • The circulating capital consists of:
      • the provisions, materials, and finished work that are with their respective dealers, and
      • the money for circulating and distributing them to consumers.

23 Of these four parts, the provisions, materials, and finished work, are annually or regularly withdrawn and placed in the fixed capital or in the stock reserved for immediate consumption.


24 Every fixed capital is originally derived from, and requires continual support, by a circulating capital.

  • All useful machines and instruments of trade are originally derived from a circulating capital.
  • The circulating capital furnishes:
    • the materials the fixed capital are made from, and
    • the maintenance of the workers who make them.
  • Fixed capital requires circulating capital to keep them in constant repair.


25 Fixed capital can only yield a revenue through a circulating capital.

  • The most useful machines and tools will produce nothing without the circulating capital which provides their materials and the maintenance of the workers who use them.
  • Land, however improved, will yield no revenue without a circulating capital to maintain the labourers who work on them.


26 The sole purpose of fixed and circulating capitals is to maintain and increase the stock reserved for immediate consumption.

  • This stock feeds, clothes, and lodges the people.
  • Their wealth depends on the stock reserved for immediate consumption from those two capitals.


27 Circulating capitals require continual supplies to continue to exist.

  • Because so much of it is continually being withdrawn to be placed:
    • in fixed capital or
    • for immediate consumption
  • These supplies are drawn from the produce of land, mines, and fisheries.
    • These afford continual supplies of provisions and materials which are then made into finished work.
      • These replace the provisions, materials, and finished work continually withdrawn from the circulating capital.
  • Money is maintained, increased, and drawn from mines.
    • It also requires continual, though much smaller supplies because it can be wasted, worn out, lost, or sent abroad.


Circular Supply Chain Barter

28 Land, mines, and fisheries, all require fixed and a circulating capital to cultivate them.

  • Their produce replaces those capitals in society with a profit.
  • The farmer annually replaces to the manufacturer the provisions which the manufacturer used.
    • The manufacturer replaces to the farmer the finished work which the farmer wasted and worn out.
  • This is the real exchange that is annually made between farmers and manufacturers.
    • Though the farmer’s produce and the manufacturer’s goods are seldomly directly bartered for one another.
      • The farmer seldomly sells his corn, cattle, flax, and wool to the manufacturer from whom he buys his clothes, furniture, and tools.
      • He sells his rude produce for money which he can use to purchase the goods he wants.
  • Land even replaces some of the capitals used in the cultivation of fisheries and mines.
    • The produce of the land draws fish from the waters and extracts minerals from the earth.


29 The produce of land, mines, and fisheries is in proportion to the extent and employment of capitals on them, when their natural fertility is equal.

  • When the capitals are equally well applied, it is in proportion to their natural fertility.


30 In all countries where there is tolerable security, every man will try to employ his stock in procuring present enjoyment or future profit.

  • If he uses it to get present enjoyment, it is called a stock reserved for immediate consumption.
    • The stock is then called a fixed capital
  • If he uses it to get future profit, it must stay with him or leave him.
    • The stock is then called a circulating capital
  • A man must be crazy to not employ all his stock, whether borrowed or not, in any of those three ways, if there is tolerable security.


30 In those unfortunate countries where men are continually afraid of the violence of their superiors, they frequently bury most of their stock in times of disaster.

  • This is a common practice in Turkey, India, and most other Asian governments.
  • It was a common practice among our ancestors during the violence of the feudal government.
    • Treasure-trove was then considered as a part of the revenue of the European sovereigns.
      • It consisted in buried treasure which belonged to no one.
      • It was so important then, that it was always considered belonging to the sovereign and not to the finder nor to the land owner, unless the right to it was expressly conveyed in a charter.
      • It was put on the same footing with gold and silver mines.
    • Without a special clause in the charter, buried treasures and gold and silver mines were never included in the grant of the lands.
      • Though lead, copper, tin, and coal mines were included.

Words: 1,392


Next: Book 2, Chapter 2A: The Net Revenue of Society

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s