BOOK II. I WOULD not, however, by all this be underftood to mean, that the one fpecies of expence always betokens a more liberal or generous fpirit than the other. When a man of fortune fpends his revenue chiefly in hospitality, he shares the greater part of it with his friends and companions; but when he employs it in purchafing fuch durable commodities, he often spends the whole upon his own perfon, and gives nothing to any body without an equivalent. The latter fpecies of expence, therefore, efpecially when directed towards frivolous objects, the little ornaments of drefs and furniture, jewels, trinkets, gewgaws, frequently indicates, not only a trifling, but a bafe and felfifh difpofition. All that I mean is, that the one fort of expence, as it always occafions fome accumulation of valuable commodities, as it is more favourable to private frugality, and, confequently, to the increase of the public capital, and as it maintains productive, rather than unproductive hands, conduces more than the other to the growth of public opulence. CHAP. CHAP. IV.. Of Stock lent at Intereft. HE ftock which is lent at intereft is al- CHA P. THE ways confidered as a capital by the lender. He expects that in due time it is to be restored THE ftock which is lent at intereft is, no doubt, occafionally employed in both these ways, but in the former much more frequently than in the latter. The man who borrows in order to spend will foon be ruined, and he who lends to him will generally have occafion to repent of his VOL. II. folly. IV. II. BOOK folly. To borrow or to lend for fuch a purpose, therefore, is in all cafes, where grofs ufury is out of the queftion, contrary to the intereft of both parties; and though it no doubt happens fometimes that people do both the one and the other; yet, from the regard that all men have for their own intereft, we may be affured, that it cannot happen fo very frequently as we are fometimes apt to imagine. Afk any rich man of common prudence, to which of the two forts of people he has lent the greater part of his stock, to those who, he thinks, will employ it profitably, or to those who will spend it idly, and he will laugh at you for propofing the queftion. Even among borrowers, therefore, not the people in the world most famous for frugality, the number of the frugal and induftrious furpaffes confiderably that of the prodigal and idle. THE only people to whom stock is commonly lent, without their being expected to make any very profitable use of it, are country gentlemen who borrow upon mortgage. Even they scarce ever borrow merely to spend. What they borrow, one may fay, is commonly fpent before they borrow it. They have generally confumed fo great a quantity of goods, advanced to them upon credit by shopkeepers and tradesmen, that they find it neceffary to borrow at interest in order. to pay the debt. The capital borrowed replaces the capitals of those shopkeepers and tradesmen, which the country gentlemen could not have replaced from the rents of their estates. It is not properly borrowed in order to be spent, but in 巻 order IV. order to replace a capital which had been spent CHAP. :before.. ALMOST all loans at intereft are made in mo ney, either of paper, or of gold and filver. But what the borrower really wants, and what the lender really fupplies him with, is not the money, but the money's worth, or the goods which it can purchafe. If he wants it as a stock for immediate confumption, it is thofe goods only which he can place in that stock. If he wants it: as a capital for employing industry, it is from thofe goods only that the industrious can be furnished with the tools, materials," and maintenance, neceffary for carrying on, their work. By means of the loan, the lender, as it were, affigns to the borrower his right to a certain portion of the annual produce of the land and labour of the country, to be employed as the borrower pleafes. THE quantity of ftock, therefore, or, as it is commonly expreffed, of money which can be lent at interest in any country, is not regulated by the value of the money, whether paper or coin, which ferves as the inftrument of the different loans made in that country, but by the value of that part of ..the annual produce, which, as foon as it comes either from the ground, or from the hands of the productive labourers, is deftined not only for replacing a capital, but such a capital as the owner does not care to be at the trouble of employing himself. As fuch capitals are commonly lent out and paid back in money, they conftitute what is called the monied intereft, It is diftinct, not only from the landed, but from the trading and manu D. 2 II. BOOK manufacturing interests, as in these last the owners themselves employ their own capitals. Even in the monied intereft, however, the money is, as it were, but the deed of affignment, which conveys from one hand to another those capitals which the owners do not care to employ themfelves. Those capitals may be greater in almost any proportion, than the amount of the money which ferves as the inftrument of their conveyance; the fame pieces of money fucceffively ferving for many different loans, as well as for many different purchases. A, for example, lends to W a thousand pounds, with which W immediately purchases of B a thousand pounds worth of goods. B having no occafion for the money himself, lends the identical pieces to X, with which X immediately purchases of C another thousand pounds worth of goods. Cin the fame manner, and for the fame reason, lends them to Y, who again purchases goods with them* of D. In this manner the fame pieces, either of coin or of paper, may, in the course of a few days, ferve as the inftrument of three different loans, and of three different purchases, each of which is, in value, equal to the whole amount of thofe pieces. What the three monied men A, B,' and C, affign to the three borrowers, W, X, Y, is the power of making thofe purchases. In this power confift both the value and the use of the loans. The stock lent by the three monied men, is equal to the value of the goods which can be purchased with it, and is three times greater than that of the money with which the purchases are made. Those loans, however, may be all per fectly |