Chapter 18 CHAPTER V USE OF CAPITAL

All capital can be used to maintain productive labor, but when the use of capital is different, the amount of productive labor that can be promoted by the same amount of capital will be very different, and the final impact on increasing the value of the land and annual output of labor will also be different. Very different. There are altogether four uses of capital: one is to obtain the primary products that society uses and consumes every year; the other is to manufacture primary products suitable for use and consumption; the third is to transport surplus primary products or finished their place; four is the division of a part of a raw or manufactured product into smaller parts to suit temporary needs.The first use is suitable for farmers, mines and fisheries, the second use is suitable for manufacturers, the third use is often used by wholesalers, and the fourth use is suitable for retailers.In my opinion, these four uses cover all investment methods, and they are so closely related that without any one of them, the other three cannot exist alone, let alone develop independently.

Therefore, they are an integral part of creating welfare for society.First, I am afraid that manufactures and commerce would not exist without capital capable of furnishing native produce.Second, some raw products often need to be processed before they can be used and consumed.If there is a lack of capital in manufactures, these native products will never be produced for lack of capital; and if these native products grow naturally, they will not increase the wealth of society because they have no exchange value.Thirdly, The native produce or manufactures which are superfluous in one place cannot, without capital, be transported to that wanting them, so that they cannot be produced in more quantities than is required for local consumption.However, if the wholesaler has capital that can be used, he can transport the surplus products of one place to other places and exchange them for local surplus products, which can both reward industry and Expand the scope of items enjoyed in these two places.Fourthly, If there is no capital for dividing a part of the native produce or manufacture into smaller parts, to suit the occasional wants of the people, all will be obliged to buy in great quantities more than they need.If there is no butcher, then when people need beef and mutton, they have to buy the whole cow or whole sheep at one time.This practice is inconvenient to the rich as well as the poor, especially to the poor.Because, if the poor can barely buy a month or half a year's worth of food at a time, most of his capital will have to be reserved for consumption, thus making a part of the capital that could have provided income no longer able to provide income, and making vocational tools and shops Utensils are reduced accordingly.The most convenient way of life for the poor is to buy daily necessities as often as he needs, so that he can invest a large part of his means, thereby increasing the value of the work he can give, and finally using the money he thus gets. Profits increase enough to offset the price of goods including the retailer's profit, with a portion remaining.

Some political commentators have some prejudices against shopkeepers, but this is completely groundless.Although the multitude of small merchants may cause some harm to each other, it will not harm the society at all, so there is no need to tax or limit their number at all.For example, the quantity of groceries that can be sold in a certain city depends on the demand for groceries in this city and its neighboring districts. Therefore, the capital invested by merchants in the groceries business can never exceed the amount required to purchase these groceries.This part of the capital is inherently limited, and if it is shared by two grocers, the price of the groceries will be lowered by competition to a level cheaper than that of a single person; accounted for, the competition would be so fierce that it would be almost impossible for them to combine to drive up prices, and even put some of them out of business.Even if we don't ask about this kind of thing, the parties themselves will be careful.Their competition does not affect the producers in the slightest, but only makes the retailers buy dear and sell cheap.

Perhaps as the number of retailers increases, there will be some harmful elements who trick weak customers into buying things they don't need.However, such small evils are not worthy of the state's attention or even interference; moreover, even if their numbers are limited, such small evils may not necessarily disappear.An obvious example is that it is not because there are more hotels on the market that the fad for drinking has arisen; Only productive laborers will invest capital in these four uses.If their labor is well employed, their labor, at least that part which sustains themselves and the value they consume, may be fixed in objects of labour, or salable goods.The profits of the farmer, manufacturer, wholesaler, and retailer are derived from these four uses.When the capitals employed in these four uses are equal and different, the quantities of productive labor which these capitals directly move are different, and therefore the proportions in which they add to the value of the land and the annual produce of labour.

The capital that the retailer uses to buy goods from the wholesaler must not only compensate the wholesaler's capital, but also provide the wholesaler with capital profits, so that the wholesaler can continue to operate.The capital of the retailer, employed only in employing himself, the only productive labourer, adds to the value of the land and the annual produce of labour, all his own profit. The wholesaler needs to buy the raw produce from the farmer, or the finished product from the manufacturer, at a capital which he expends in such a way as to replace the capital and his profits sufficient to keep the farmer and manufacturer in business.This is the chief method by which the wholesaler indirectly maintains productive labour, and increases the value of the annual produce of the society.As he employed his capital to employ sailors and porters to help him transport his goods, the price of these goods increased accordingly, and had to rise sufficiently to pay the wholesaler's own profits and the wages of the sailors and porters.Though the productive labor employed by the wholesaler, and the value he directly adds to the annual produce, are no more than this, yet his capital plays a far greater part in both than that of the retailer.

The manufacturer will invest a part of his capital as fixed capital in the implements of production, in order to replace the capital and his profit of the seller of these implements.The rest is circulating capital, a small part of which is used to buy materials to compensate the farmers and miners who supplied them with their capital and their profits; Worker.The value added to the material by the capital of the manufacturer, therefore, includes not only the wages of the hired labourers, but also the capital of the employer in paying wages and in purchasing materials and implements, together with his profits.The quantity of productive labor directly set in motion by the capital of the manufacturer, therefore, plays a much greater part, and adds a much greater value to the land and the annual produce of labour, than the equivalent capital of the wholesaler.

The capital of the farmer has the greatest impetus to the quantity of productive labour.Because his workers and livestock are productive laborers, and he also works with him without compensation.The labor of nature is gratis, but its produce is as valuable as that of the costly labourer.Although agriculture increases the productivity of nature, its most important task is not to increase the productivity of nature, but to guide nature to produce the most beneficial plants for human beings.Whether it is a field overgrown with basil, brambles, or the best-cultivated vineyard or field, it is likely to produce an equal amount of plants.It is more appropriate to say that cultivation increases the productive power of nature than that it dominates the productive power of nature.Most of the work cannot be done by human beings, only by relying on nature.Therefore, the workers and animals employed in agriculture can not only reproduce the value they consume like the workers in the manufacturing industry, that is, reproduce the capital that employs them, but also produce greater value while providing profits to the capitalists. And reproduce the rent of the landlord.This rent is actually a product of natural forces, transferred through the landlord to the farmers, and its magnitude depends on the magnitude of the imagined natural forces, that is, the imagined natural or improved productivity of the land.After the human labor is completely subtracted, what is left is natural labor, and the value provided by it accounts for no less than a quarter of the total product, and often accounts for more than one third. .Such a large reproduction output cannot be produced by any same amount of productive labor in manufacturing.Everything in the manufacturing industry is made by man, and nature does nothing, and its reproductive output is always proportional to the force that leads to reproduction.The capital invested in agriculture, therefore, promotes an increase in the quantity of productive labour, more than an equal amount of capital invested in manufactures.Moreover, the value which agricultural capital adds to the annual produce of the land and labor of a country, and to the wealth and income of the nation, is much greater in proportion to the quantity of productive labor which it can employ.Agricultural investment is the most socially beneficial investment among various capital uses.

Agricultural and retail capitals always circulate in the country, and their places of employment are fixed.Agricultural capital is generally used on farms, retail capital is used in shops.The owners of these capitals are both domestic residents and other residents, but the majority are domestic residents. The wholesaler's capital, however, circulates in a non-fixed place.In fact, there is no need for it to circulate in a specific place, and it generally only travels around to buy cheap and sell expensive. The capital of the manufacturer, on the other hand, naturally resides in the place of manufacture, though the place of manufacture is not necessarily definite, and may be at a great distance from where the materials are produced and where the finished product is sold.Lyon, for example, not only has its manufacturing materials transported far away, but its products have to be transported far away before anyone consumes them; let’s talk about Sicily, where the fashionable people’s silk clothing is imported from other countries, and the silk The raw materials, however, came from Sicily itself; and Spain, which produced part of its wool in England, which in turn sent part of its woolen fabrics back to Spain.

Both locals and foreigners can invest in domestic surplus product export business.The domestic laborers would naturally be less in number, if they would employ less productive laborers at home; but the value of the annual produce of Great Britain would only diminish this small part of the profits.As for sailors and porters, no matter whether they are natives or foreigners, they can be hired.The exporters have different nationalities, but the exporting capital is different.When the domestic surplus-produce is exported in exchange for domestic wants, the foreign capital and the domestic capital alike assign the same value to this surplus-product.Whether the wholesaler is a native or a foreigner, his capital effectively repays the capital necessary for the production of this surplus produce, and enables the producer to continue in business.The stock of the wholesaler, therefore, helps not only to maintain the productive labor of the country, but also to increase the value of the annual produce of the country.

It is more important that the manufacturer's capital should remain at home.For, if such a capital exists in the country, it must, to a great extent, promote the quantity of productive labour, and increase the value of the land and annual produce of that country's labour.However, this does not mean that the capital of foreign manufacturers has no utility for the country.The flax makers in England, for example, annually pay for the import of flax from all over the Baltic coast for processing.Although this capital does not belong to the hemp-producing country, it is also obviously beneficial to the hemp-producing country.This kind of flax is only the surplus product of the producing country. If it is not exported every year in exchange for local needs, its production will be stopped immediately because it is worthless.Now that flax can be exported, the exporting capital will be able to repay the cost of producing the flax, thereby encouraging the flax producers to continue producing; and the English manufacturers will be able to repay the importing capital, thereby enabling the continuation of the flax transportation.

The improvement and cultivation of all the land, the processing of all the native produce into manufactures fit for immediate consumption and use, and the exchange of the surplus of the native produce and manufactures for goods in distant places for domestic needs, require sufficient capital, and this capital Often a country cannot afford to pay.Many of the inhabitants of Great Britain have insufficient capital to improve and cultivate all their land.Most of the wool in southern Scotland had to be transported over rough roads to Yorkshire for processing due to lack of capital.The produce of many small industrial towns in England cannot be transported for sale to distant places where it is needed, for want of capital.Even if there were a few local merchants, they were only managers of the big rich merchants, and those big rich merchants usually lived in the larger commercial cities. If the capital of a country is not sufficient to simultaneously engage in agriculture, manufactures, and retail trade, then we may conclude that the greater the investment in agriculture, the more it will increase the quantity of productive labor in the country, and the more it will increase the annual product of land and labor. value.The second is the manufacturing industry, and the least effective is the retail capital invested in export trade. As a matter of fact, if the capital of a country is not sufficient to engage in these three businesses concurrently, then its degree of wealth has not reached the limit that nature allows.If these three types of businesses are run concurrently when the time is not ripe, neither the individual nor the society can obtain sufficient capital the fastest.The capital of all the people in the country, that is, the total capital of a country, is as limited as the capital of individuals, and is often only sufficient for certain purposes.The way to increase personal capital and national capital is to save income and keep saving.Therefore, if capital can provide the maximum income for domestic residents, so that all residents can save to the maximum, then national capital will naturally increase rapidly.It is, however, the size of the annual produce of land and labour, which determines the magnitude of the income of the whole population of the country. Almost all British American colonies invested in agriculture, and because of this, they became rich and powerful quickly.There are few pure manufactures there, but the kind of home and crude manufactures which have grown up with the progress of agriculture, and which are performed by the women and children of every family.Most of the investors in the export industry and shipping industry are businessmen living in the UK; especially the retail stores and warehouses in provinces such as Vivania and Maryland are mostly operated by British businessmen living in their home countries. This is one of the few instances where the retail industry is not run by local merchants.If the Americans, by united competition or other drastic means, prevent the influx of European manufactures, thereby maintaining the monopoly of native commodities, and diverting the greater part of native capital to manufactures, they will not achieve their intended purpose, but will It will also hinder the increase in the value of their annual products, and even hinder the growing prosperity of the country.In the same way, if they managed to monopolize all export industries, maybe the result would be worse. The prosperity of mankind never seems to have lasted so long as to enable all the great powers to acquire capital sufficient for these three enterprises at the same time.If this ever happened, it would have to prove the fantastic accounts of the affluence and agriculture of China, ancient Egypt, and ancient India.Even though these three countries are regarded as the wealthiest countries in all records, they are only good at industry and agriculture, and their foreign trade is not prosperous.Because the ancient Egyptians and Indians both had a superstitious fear of the ocean, and China's foreign trade has always been underdeveloped.The greater part of their surplus produce seems to have been shipped abroad by foreigners, at the price of gold, silver, etc., which they required. It follows, therefore, that the proportions in which a country invests in agriculture, industry, and wholesale trade determine the magnitude of the quantity of labor which the same capital moves within the country, and the magnitude of the increase in the value of the annual produce of land and labour.Moreover, even if they are all wholesale businesses, if the types of business are different, the investment results will be very different. Wholesale trade is a trade that buys in large quantities and then sells in large quantities. It can be divided into three types of trade: domestic trade, foreign trade of consumer goods, and transportation trade.Domestic trade means that the places where goods are bought and sold are all in the country, but the regions are different, including inland trade and coastal trade.Foreign trade in consumer goods is the purchase of foreign consumer goods for the use of the natives.Transport trade is mainly carried out between countries, that is, the surplus products of one country are transported to another country. The use of capital to purchase products from A land and then transport them to B for sale can generally repay the agricultural or industrial capital invested, so that the country's agricultural or manufacturing industries will not be interrupted.A commodity of a certain value shipped out of a merchant by capital will generally be exchanged for at least one other commodity of equal value.Therefore, if both parties in the transaction are exchanging domestic products, not only can the capital for maintaining these two kinds of productive labor be repaid, but productive labor can also be maintained.For example, in transporting the manufactures of Scotland to London, and the corn or manufactures of England to Edinburgh, the capital of one round trip will undoubtedly repay the investment. If the produce of this country is used to purchase foreign goods for domestic consumption, the capital of one round trip will also repay two parts of capital, only one part of which is employed in the maintenance of foreign industry.For example, in the exchange of goods between England and Portugal, one part of the capital that can be repaid by a round trip goes to England and the other part to Portugal.Even if, therefore, this trade were to return itself as rapidly as the domestic trade, the capital employed in it would be only half employed in encouraging the domestic industry, and the other half in encouraging the productive labor of the country.In fact, such trade rarely earns back its capital as quickly as domestic trade.The capital of domestic trade is generally earned back once a year, and at most only three or four times.The capital of this kind of business is rarely earned back once a year; even if it is earned back once every two or three years, it is not surprising.In general, the capital invested in domestic trade has often made twelve round trips, and the capital invested in this trade can only go back and forth once.Therefore, if the capital invested in domestic trade and foreign trade is the same, the encouragement and support that the former can provide to the domestic industry is often twenty-four times that of the latter. Not all foreign goods consumed domestically are bought in exchange for domestic products, but also in exchange for goods from third countries.The goods of this third country must be purchased directly or indirectly from domestic products.In other words, domestic products are used to purchase goods from a third country, and goods from the third country are used to purchase goods from a second country, that is, foreign goods for domestic consumption.For, except in times of war and conquest, foreign goods can be acquired only by the direct exchange of their own produce with foreign countries;Therefore, whether the capital is detoured or invested directly in foreign trade, the effect is the same.However, if the investment is roundabout, then the return of capital must rely on the return of two or three different foreign trade capitals, so the time required for the return of capital is also longer.Assuming that a merchant first exchanges British manufactures for Virginia tobacco, and then exchanges these tobaccos for Riga hemp, the capital invested by the merchant will have to go through two foreign trades before returning to him for his purchase, etc. Valuable British manufacture.Another hypothesis is that, if English manufactures were first exchanged for Jamaica sugar, and these sugars were exchanged for Virginia tobacco, the merchant's capital would have to go through three foreign trades before he could use it for Buy equivalent value British manufactured goods.Suppose again the third case, that is, the two or three foreign trades are conducted by different merchants: the first merchant imports goods and sells them to the second merchant; the second merchant exports the goods and imports other goods ; the third merchant buys other goods imported by the second merchant and sells them.At this time, the capital recovery speed of various merchants is relatively fast.But the recovery of the whole capital is still as slow as before. The ownership of the capital invested in this roundabout trade may have some influence on individual merchants, but not on the State at all.The indirect exchange of English manufactures for hemp, whether owned by one or three persons, requires three times as much capital as would be required in the direct exchange.Therefore, even if the direct and circuitous capital invested in the foreign trade of consumer goods were equal, the circuitous investment would often afford less encouragement and support to the productive labor of the country. Whatever foreign goods may be used to purchase domestic consumption, cannot alter the nature of the above-mentioned trade, that is, the encouragement and support it provides to the productive labor of the country are certain.Whether to buy Brazilian gold or Peruvian silver, it is necessary, as in Virginia tobacco, to use the native produce, or something in exchange for it.The foreign trade, therefore, of consumer goods, whether by means of gold and silver, or of any other indirect way, will have the same interest in the productive labor of the country, even if they repay the labor directly employed in its maintenance. The velocity of capital is the same.In contrast, the foreign trade in consumer goods by means of gold and silver seems to have the additional advantage, that a small volume of gold and silver contains a great value, and therefore costs much less in transportation than other goods of equivalent value, Insurance premiums are relatively low.Moreover, gold and silver are less likely to be damaged by transportation.By the medium of gold and silver, often an equal quantity of foreign goods may be procured with less native goods, than by the medium of other foreign goods.The medium of gold and silver, therefore, is more suitable than that of other foreign goods, as domestic wants may be amply supplied at less expense.Will not the constant purchase of foreign goods with gold and silver to satisfy the needs of the country impoverish the country?We will discuss this issue later. The capital invested in the transport trade is all drawn from the country, and it could have been used to maintain the productive labor of the country, but is now used to maintain the productive labor of foreign countries.A single operation of this trade also repays both parts of the capital.However, neither part of the capital is returned to the home country.For example, a Dutch merchant first transported Polish grain to Portugal, and then Portuguese fruit and wine to Poland. Although his income repaid two parts of capital, that is, it provided support for productive labor in Poland and Portugal respectively. However, it did not provide support for the productive labor of the Netherlands, and only the profits he earned belonged to the Netherlands, so it did not have a major impact on the increase in the annual output of the land and labor in the Netherlands. Of course, if domestic ships and sailors are employed in the transport trade, then the part of the capital invested in paying the freight is employed in the productive labor of the country, that is, in promoting the productive labor of the country.Most countries with developed transport trade do this.The term transport trade may be derived from this.Because such a person is a carrier to foreigners.However, the ships and sailors required for transportation are not necessarily nationals.For example, Dutch merchants who carried out shipping trade between Poland and Portugal did not necessarily have to use Dutch ships to do business, even if they used British ships.In fact, sometimes he does.Moreover, the defense and security of England are determined by the number of ships and sailors.It is for this reason that the transport trade is supposed to be especially favorable to a country like Great Britain. If the necessary transportation be effected by short sea voyages, and if the capital is the same, the foreign trade as well as the domestic trade of consumer goods may employ as many ships and sailors.It is not the nature of the trade that determines the number of ships and sailors that a given amount of capital can employ, but the proportion of the volume of the goods to their value, and the distance between the sea-ports of carriage, and the former is especially important.For instance, notwithstanding the nearness of Newcastle and London, the coal trade between the two sea-ports employs more ships and sailors than the whole transport trade of England requires.Therefore, it is not necessary to increase the shipping industry of a country by forcing the greater part of the capital of a country to invest in the transport trade by extraordinary incentives. An equal amount of capital employed in the home trade, not only maintains and encourages a greater quantity of domestic productive labour, but also increases the value of the annual produce, than is employed in the foreign trade of consumer goods.But an equal amount of capital invested in the foreign trade of consumer goods will afford a greater advantage in both respects than a capital invested in the transporting trade.Today, when wealth determines power, the prosperity of a country must be commensurate with the total value of its annual products, that is, the total tax.Since the improvement of the country's wealth and power is the great object of political economy, it is the domestic trade which is most worthy of reward, then the foreign trade in consumer goods, and finally the transport trade.It is, therefore, not in the interest of the country to compel or induce the greater part of capital to flow into the foreign or transport trade of consumer goods. However, if these three kinds of trade develop naturally in accordance with the development of things without restraint, then no matter what kind of trade it is, it is beneficial and necessary. If the production of a particular branch of industry in a country exceeds its own needs, the surplus will necessarily be shipped abroad and exchanged for other goods for domestic consumption.The absence of this export would, at this time, necessarily bring to a standstill a part of the productive labor in the country, and consequently reduce the value of the annual produce of the country.There would be a surplus of corn, woolen cloth, and metalwork in England, so that the surplus would have to be shipped abroad to be exchanged for what was needed at home.If this exportation were now short, the remainder would not fetch a price sufficient to replace the capital required for their production.This type of industry is generally operated along the coast and along the river, because the surplus products are easy to export, and it is more convenient for people to exchange goods from other regions for local consumption. It is not advisable to buy more foreign goods with the surplus produce of the country than is required at home; otherwise, these surplus goods must also be shipped abroad, and exchanged for other goods for domestic needs.By exporting a part of her surplus produce, England can buy about 96,000 barrels of tobacco from Virginia and Maryland each year, while her actual needs are no more than 14,000 barrels.If, therefore, the surplus tobacco could not be brought abroad in time, and exchanged for other articles required at home, the importation of this tobacco would immediately cease.For the goods produced every year for the purchase of surplus tobacco exceed the needs of the country, and now that even the export is cut off, the production will naturally stop, and finally some of the British who produce this goods will lose their jobs.The foreign commerce, therefore, of the most roundabout articles of consumption, sometimes supports the productive labor of the country, and the value of the annual produce of the country, just as much as that of the most immediate articles of consumption. If the accumulated capital of a country is not fully used to supply domestic consumption and maintain productive labor in the country, then the surplus capital will naturally flow into foreign countries through the channel of transportation and trade for consumption in other countries and maintain productive labor in other countries.Transport trade represents national wealth, and it is the natural consequence, not the cause, of the increase of national wealth.This trade was not only approved by some politicians, but also specially rewarded by them.However, these politicians seem to regard it as the reason for the increase of national wealth. Holland is the richest country in Europe in terms of land area and number of inhabitants, so it occupies the largest part of European transport trade.England's wealth is second only to the Netherlands, it is the second richest country in Europe, and the transportation trade is also very prosperous.England's transport trade, however, is generally inferior to the indirect foreign trade in consumer goods.Most of our trade, which carries to Europe the goods of the Orient, the West Indies, and America, is of this nature.The value for which such goods are acquired is either English produce, or what is exchanged for English produce.Moreover, most of the goods brought back by this trade were finally consumed and used in England.England's real shipping trade consisted only of that carried on by British steamers between the ports of the Mediterranean, and between the ports of the Indian coast by English merchants. Internal trade arises from the necessity of exchanging surplus produce among different parts of the country.It follows, therefore, that the extent of domestic trade, and the quantity of investment, are necessarily regulated by the value of the surplus produce of the various parts of the country; while the extent of foreign trade in consumer goods is governed not only by the value of the surplus produce of the country, but also by the value of these produce. The value of items that can be purchased.Transport trade is a trade in which surplus products are exchanged around the world, so its trade scope is bound to be restricted by the value of world surplus products.Compared with the previous two types of trade, its scope of trade is almost unlimited, and the capital it can attract is also the largest. The sole motive in determining the use of capital is private profit.What determines the investment of capital in agriculture, in industry, or in wholesale trade, is which trade produces the greatest profit.Merchants, in investing their investments, never consider what use will most promote the quantity of productive labour, and what will most increase the value of the land and the annual produce of labour.In countries, therefore, where cultivation is most profitable, and agriculture most profitable, individuals will naturally invest in those uses which are most advantageous to the community. The case of Europe, however, is different, and the profits derived from agricultural investments are not necessarily greater than those derived from other undertakings.Though in recent years many planners in Europe have extolled the profits of farming, it is but a little observation of their calculations to show that their conclusions are entirely erroneous.We often see people who start from scratch with a small amount of capital, or even have no capital, become rich as long as they engage in manufacturing or business operations for decades.However, in nearly a century in Europe, there has hardly been a single case of using a small amount of capital to manage agriculture and make a fortune.Many good lands are still uncultivated in the great countries of Europe; and even some of the cultivated lands have not been sufficiently improved.The agriculture of all parts of Europe, therefore, can still accommodate a great deal of capital.Due to the influence of the policies of European countries, the benefits of operating industries in urban areas are much more than those in rural areas.Therefore, individuals often prefer to carry out transportation trade in distant places such as Asia and America, rather than invest in fertile land close to themselves.For a detailed discussion of this issue, see the next section.