The returns coming in from their industry, being only sufficient to reconstruct the instruments as they are severally exhausted, an additional drain made upon their funds must, in most eases, prevent the reconstruction of many of them, and consequently occasion a disappearance, to that amount, of a portion of the general stock.But, when instruments are of more productive orders than the effective desire of accumulation of the society demands, the abstraction of a part of their returns by the state, to supply its exigencies, only carries them nearer, or brings them altogether to an order corresponding to the strength of that desire, and, therefore, interferes not with their reconstruction.Taxation is paid out of revenue, not out of capital.
3.As it is the effect of improvement, to carry instruments into orders of quicker return than the accumulative principle of the society demands, a greater range of materials is brought within reach of that principle, and it consequently forms an additional amount of instruments.The various agricultural improvements with which invention enriched that art in Britain towards the conclusion of the last, and commencement of the present century, occasioned a great amount of materials to be wrought up, which before lay dormant.The construction of the plough in Scotland, and generally over the island, was so improved that two horses did the work of six oxen.The diminution of outlay thus produced, giving the farmer, from a smaller capital, an equal return; he was encouraged and enabled to apply himself to materials, which he would otherwise have left, as his forefathers had done, untouched.
He carried off stones from his fields, built fences, dug ditches, formed drains, and constructed roads.-- Lime was discovered to be a profitable manure.The additional returns, which the hard clay thus converted into a black loam yielded, were spent in the cultivation of land before waste, in levelling and reducing to regularity, the rude ridges of antecedent periods.-- The culture of turnips was introduced; and instead of useless fallows the farmer had a large supply of a nutritive food for his cattle.
He erected better buildings for the reception of his stock, he improved their breed, he transported manure from great distances, he had his fields trenched deeply with the spade, fresh soil brought up, and all useless or prejudicial matters buried beneath.Each succeeding improvement gave a fresh stimulus to industry, and brought new materials within the compass of the providence of the agriculturist.Nor was this all; the stimulus reacted also on the inhabitants of the towns, and their industry was augmented by the increased returns yielded by the country, and by the new demands made by it.Improvements, too, in the branches of industry in which they were themselves engaged, of at least equal extent, carried them forward in a like career.Rocks were quarried; forests were thinned; lime was burned;the metal left the mine; large manufacturing establishments arose; wharfs, docks, canals, and bridges were constructed; villages were changed into towns, and towns into cities.
It is thus that every improvement animates industry, and though it cannot increase the amount of instruments immediately possessed by the society, or the sum of the values produced by measuring the one with the other, shows that the members of the society really estimate them higher than they would thus be rated, by their instantly commencing to work up, into analogous instruments, inferior or more stubborn materials, or by their working up similar materials more laboriously.The amount thus wrought up, until the process stops, by the total instruments constructed arriving at an order correspondent to the effective desire of accumulation oi the society, must depend entirely on the nature of those materials, and is, therefore, always a variable quantity, and one never to be ascertained previous to the event.Sometimes a very small improvement may put a large range of materials within reach of the accumulative principle, sometimes a very considerable improvement may not enable it to nmke much addition to the stock of instruments before constructed.
When misfortunes befal the general industry of a community, improvements, though they may not add to the national capital, prevent or lessen the threatened diminution of it.In agriculture, the introduction of the drill husbandry for grain crops, and the discovery of new manures; in manufactures and trade, the improved construction of steam engines, the discovery of railroads, and many other recent improvements, have taken off part of the weight of the heavy burden, that has of late years been imposed on the resources of Great Britain.
The high rate of profit, which, unless when counteracting causes intervene, follows the introduction of improvement, is indicative of an immediate proportional augmentation of the absolute capital of the society, and produces a subsequent addition to its relative capital, the amount of which is determined by the additional capacity which the materials in possession of the community can receive, and by the quantity of materials of the next lower grades owned by it.That high rate of profits, again, which arises from a deficiency in the strength of the effective desire of accumulation, is essentially different.It indicates no increase of the absolute capital of the society, no recent increase of the revenue of its members, no greater ability to support public burdens, and no approaching increase of relative capital.
The want of a clear perception of this distinction, seems to bare led Adam Smith, and some other writers, to speak of high profits as generally prejudicial.
