Principium Volume II, Book 8, Quote 836 and 837

836. (6-17-2010) (The understanding of how stock can be put to use to bring in greater amounts of revenue, lifting it’s possessor to “greator” [sic] endeavors and greater ability to enjoy luxury from the abundance, stock working for the possessor above that which is his own labor can or could provide. This book - Principium - is in effort to help, through knowledge, move us/you ahead to greater knowledge and achievement. Notice in this next quote how employees are viewed.)ATJ When the stock (capital)ATJ which a man possesses is no more than sufficient to maintain him for a few days or weeks, he seldom thinks of deriving any revenue from it. He consumes it as sparingly as he can, and endeavors by his labour [sic] to acquire something which may supply its place before it be consumed altogether. His revenue is, in this case, derived from his labour only. This is the state of the greater part of the labouring poor in all countries. But when he possesses stock sufficient to maintain him for months or years, he naturally endeavours to derive a revenue (profit)ATJ from the greater part of it; reserving only so much for his immediate consumption as may maintain him till this revenue begins to come in. His whole stock, therefore, is distinguished into two parts. That part which, he expects, is to afford him this revenue, is called his capital. The other is that which supplies his immediate consumption; and which consists either, first, in that portion of his whole stock which was originally reserved for this purpose; or, secondly, in his revenue, from whatever source derived, as it gradually comes in; or, thirdly, in such things as had been purchased (accumulated material goods)ATJ by either of these in former years, and which are not yet entirely consumed; such as a stock of clothes, household furniture, and the like. In one, or other, or all of these three articles, consists the stock of which men commonly reserve for their own immediate consumption.

- Adam Smith – The Wealth of Nations, 1776

837. (6-17-2010) (How can capital be employed?)ATJ There are two different ways in which a capital may be employed so as to yield a revenue or profit to its employer. First, it may be employed in raising, manufacturing, or purchasing goods, and selling them again with a profit. The capital employed in this manner yields no revenue or profit to its employer, while it either remains in his possession, or continues in the same shape. The goods of the merchant yield him no revenue or profit till he sells them for money, and the money yields him as little till it is again exchanged for goods. His capital is continually going from him in one shape, and returning to him in another, and it is only by means of such circulation, or successive exchanges, that it can yield him any profit. Such capitals, therefore, may very properly be called circulating capitals. Secondly, it may be employed in the improvement of land, in the purchase of useful machines and instruments of trade, or in such like things as yield a revenue or profit without changing masters, or circulating any further. Such capitals, therefore, may very properly be called fixed capitals (today, the word capital is often substituted with the word “asset.”)ATJ

- Adam Smith – The Wealth of Nations, 1776

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