Reflections on the Formation and Distribution of wealth [15]
net produce of an acre of land, was worth six sheep, the acre itself that feeds them could have been given for a certain value, greater indeed, but always easy to settle by the same way, as the price of other wares. Namely, at first by debates among the two contractors, next, by the current price established by the agreement of those who exchange land for cattle, or the contrary. It is by the scale of this current specie that lands are appraised, when a debtor is prosecuted by his creditor, and is constrained to yield up his property.
57. Valuations of lands by the proportion of their revenue, with the sum of personal property, or the value for which they are exchanged: this proportion is called the price of lands.
It is evident, that if land, which produces a revenue equivalent to six sheep, can be sold for a certain value, which may always be expressed by a number of sheep equivalent to that value; this number will bear a fixed proportion with that of six, and will contain it a certain number of times. Thus the price of an estate is nothing else but its revenue multiplied a certain number of times; twenty times if the price is a hundred and twenty sheep; thirty times if one hundred and eighty sheep. And so the current price of land is reckoned by the proportion of the value of the revenue; and the number of times, that the price of the sale contains that of the revenue, is called so many years purchase of the land. They are sold at the price of twenty, thirty, or forty years purchase, when on purchasing them we pay twenty, thirty, or forty times. their revenue. It is also not less evident, that this price must vary according to the number of purchasers, or sellers of land, in the same manner as other goods vary in a ratio to the different proportion between the offer and the demand.
58. All capital in money, and all amounts of value, are equivalent to land producing a revenue equal to some portion of that capital or value. First employment of capitals. Purchase of lands.
Let us now go back to the time after the introduction of money. The facility of accumulating it has soon rendered it the most desirable part of personal property, and has afforded the means of augmenting, by economy, the quantity of it without limits. Whoever, either by the revenue of his land. or by the salary of his labour or industry, receives every year a higher income than he needs to spend, may lay up the residue and accumulate it: these accumulated values are what we name a capital. The pusillanimous miser, that keeps his money with the mere view of soothing his imagination against apprehension of distress in the uncertainty of futurity, keeps his money in a hoard. If the dangers he had foreseen should eventually take place, and he in his poverty be reduced to live every year upon the treasure, or a prodigal successor lavish it by degrees, this treasure would soon be exhausted, and the capital totally lost to the possessor. The latter can draw a far greater advantage from it; for an estate in land of a certain revenue, being but an equivalent of a sum of value equal to the revenue, taken a certain number of times, it follows, that any sum whatsoever of value is equivalent to an estate in land, producing a revenue equal to a fixed proportion of that sum. It is perfectly the same whether the amount of this capital consists in a mass of metal, or any other matter, since money represents all kinds of value. as well as all kinds of value represent money. By these means the possessor of a capital may at first employ it in the purchase of lands; but he is not without other resources.
59. Another employment for money in advances for enterprises of manufacture or industry.
I have already observed, that all kinds of labour, either of cultivation or industry, required advances. And I have shewn how the earth, by the fruits and herbages it spontaneously produces for the nourishment of men and animals, and by the trees, of which man has first formed his utensils, had furnished the first advances for cultivation; and
57. Valuations of lands by the proportion of their revenue, with the sum of personal property, or the value for which they are exchanged: this proportion is called the price of lands.
It is evident, that if land, which produces a revenue equivalent to six sheep, can be sold for a certain value, which may always be expressed by a number of sheep equivalent to that value; this number will bear a fixed proportion with that of six, and will contain it a certain number of times. Thus the price of an estate is nothing else but its revenue multiplied a certain number of times; twenty times if the price is a hundred and twenty sheep; thirty times if one hundred and eighty sheep. And so the current price of land is reckoned by the proportion of the value of the revenue; and the number of times, that the price of the sale contains that of the revenue, is called so many years purchase of the land. They are sold at the price of twenty, thirty, or forty years purchase, when on purchasing them we pay twenty, thirty, or forty times. their revenue. It is also not less evident, that this price must vary according to the number of purchasers, or sellers of land, in the same manner as other goods vary in a ratio to the different proportion between the offer and the demand.
58. All capital in money, and all amounts of value, are equivalent to land producing a revenue equal to some portion of that capital or value. First employment of capitals. Purchase of lands.
Let us now go back to the time after the introduction of money. The facility of accumulating it has soon rendered it the most desirable part of personal property, and has afforded the means of augmenting, by economy, the quantity of it without limits. Whoever, either by the revenue of his land. or by the salary of his labour or industry, receives every year a higher income than he needs to spend, may lay up the residue and accumulate it: these accumulated values are what we name a capital. The pusillanimous miser, that keeps his money with the mere view of soothing his imagination against apprehension of distress in the uncertainty of futurity, keeps his money in a hoard. If the dangers he had foreseen should eventually take place, and he in his poverty be reduced to live every year upon the treasure, or a prodigal successor lavish it by degrees, this treasure would soon be exhausted, and the capital totally lost to the possessor. The latter can draw a far greater advantage from it; for an estate in land of a certain revenue, being but an equivalent of a sum of value equal to the revenue, taken a certain number of times, it follows, that any sum whatsoever of value is equivalent to an estate in land, producing a revenue equal to a fixed proportion of that sum. It is perfectly the same whether the amount of this capital consists in a mass of metal, or any other matter, since money represents all kinds of value. as well as all kinds of value represent money. By these means the possessor of a capital may at first employ it in the purchase of lands; but he is not without other resources.
59. Another employment for money in advances for enterprises of manufacture or industry.
I have already observed, that all kinds of labour, either of cultivation or industry, required advances. And I have shewn how the earth, by the fruits and herbages it spontaneously produces for the nourishment of men and animals, and by the trees, of which man has first formed his utensils, had furnished the first advances for cultivation; and