Reflections on the Formation and Distribution of wealth [26]
expences within their incomes, and pay great attention not to touch their capital. Those who wish to become rich are far more numerous in a nation than those which are already so. Now, in the present state of things, as all the land is occupied, there is but one way to become rich it is either to possess, or to procure in some way or other, a revenue or an annual profit above what is absolutely necessary for subsistence, and to lay up every year in reserve to form a capital, by means of which they may obtain an increase of revenue or annual profit, which will again produce another saving, and become capital. There are consequently a great number of men interested and employed in amusing capitals.
83. Recapituation of the five different methods of employing capitals.
I have reckoned five different methods of employing capitals, or of placing them so as to procure a profit. 1st. To buy an estate, which brings in a certain revenue. 2d. To employ money in undertakings of cultivation; in leasing lands whose produce should render back, besides the expences of farming, the interest on the advances, and a recompense for the labour of him who employs his property and attention in the cultivation. 3d. To place a capital in some undertaking of industry or manufactures. 4th. To employ it in commerce. 5th. To lend it to those who want it, for an annual interest.
84. The influence which the different methods of employing money have on each other.
It is evident that the annual returns, which capitals, placed in different employs, will produce, are proportionate to each other, and all have relation to the actual rate of the interest of money.
85. Money invested in land, necessarily produces the least.
The person who invests his money in land let to a solvent tenant, procures himself a revenue which gives him very little trouble in receiving, and which he may dispose of in the most agreeable manner, by indulging all his inclinations. There is a greater advantage in the purchase of this species of property, than of any other, since the possession of it is more guarded against accidents. We must therefore purchase a revenue in land at a higher price, and must content ourselves with a less revenue for an equal capital.
86. Money on interest ought to bring a little more income, than land purchased with an equal capital.
He who lends his money on interest, enjoys it still more peaceably and freely than the possessor of land, but the insolvency of his debtor may endanger the loss of his capital. He will not therefore content himself with an interest equal to the revenue of the land which he could buy with an equal capital. The interest of money lent, must consequently be larger than the revenue of an estate purchased with the same capital; for if the proprietor could find an estate to purchase of an equal income, he would prefer that.
87. Money employed in cultivation, manufactures, or commerce, ought to produce more than the interest of money on loan.
By a like reason, money employed in agriculture, in manufactures, or in commerce, ought to produce a more considerable profit than the revenue of the same capital employed in the purchase of lands, or the interest of money on loan: for these undertakings, besides the capital advanced, requiring much care and labour, and if they were not more lucrative, it would be much better to secure an equal revenue, which might be enjoyed without labour. It is necessary then, that, besides the interest of the capital, the undertaker should draw every year a profit to recompence him for his care, his labour, his talents, the risque he runs, and to replace the wear and tear of that portion of his capital which he is obliged to invest in effects capable of receiving injury, and exposed to all kinds of accidents.
88. Meantime the freedom of these various employments are limited by each other, and maintain, notwithstanding their inequality, a species of equilibrium.
The different uses of the capitals produce very
83. Recapituation of the five different methods of employing capitals.
I have reckoned five different methods of employing capitals, or of placing them so as to procure a profit. 1st. To buy an estate, which brings in a certain revenue. 2d. To employ money in undertakings of cultivation; in leasing lands whose produce should render back, besides the expences of farming, the interest on the advances, and a recompense for the labour of him who employs his property and attention in the cultivation. 3d. To place a capital in some undertaking of industry or manufactures. 4th. To employ it in commerce. 5th. To lend it to those who want it, for an annual interest.
84. The influence which the different methods of employing money have on each other.
It is evident that the annual returns, which capitals, placed in different employs, will produce, are proportionate to each other, and all have relation to the actual rate of the interest of money.
85. Money invested in land, necessarily produces the least.
The person who invests his money in land let to a solvent tenant, procures himself a revenue which gives him very little trouble in receiving, and which he may dispose of in the most agreeable manner, by indulging all his inclinations. There is a greater advantage in the purchase of this species of property, than of any other, since the possession of it is more guarded against accidents. We must therefore purchase a revenue in land at a higher price, and must content ourselves with a less revenue for an equal capital.
86. Money on interest ought to bring a little more income, than land purchased with an equal capital.
He who lends his money on interest, enjoys it still more peaceably and freely than the possessor of land, but the insolvency of his debtor may endanger the loss of his capital. He will not therefore content himself with an interest equal to the revenue of the land which he could buy with an equal capital. The interest of money lent, must consequently be larger than the revenue of an estate purchased with the same capital; for if the proprietor could find an estate to purchase of an equal income, he would prefer that.
87. Money employed in cultivation, manufactures, or commerce, ought to produce more than the interest of money on loan.
By a like reason, money employed in agriculture, in manufactures, or in commerce, ought to produce a more considerable profit than the revenue of the same capital employed in the purchase of lands, or the interest of money on loan: for these undertakings, besides the capital advanced, requiring much care and labour, and if they were not more lucrative, it would be much better to secure an equal revenue, which might be enjoyed without labour. It is necessary then, that, besides the interest of the capital, the undertaker should draw every year a profit to recompence him for his care, his labour, his talents, the risque he runs, and to replace the wear and tear of that portion of his capital which he is obliged to invest in effects capable of receiving injury, and exposed to all kinds of accidents.
88. Meantime the freedom of these various employments are limited by each other, and maintain, notwithstanding their inequality, a species of equilibrium.
The different uses of the capitals produce very