(4.iii.16) Though it be undeniable, that the demand, which every man brings, is equal to thesupply, which he brings, he may not find in the market the sort of purchaser, which he wants. Noman may have come desiring that sort of commodity, of which he has to dispose. It is not theless necessarily true, that he came with a demand equal to his supply; for he wanted somethingin return for the goods which he brought It makes no difference to say, that perhaps he onlywanted money; for money is itself goods; and, besides, no man wants money but in order to layit out, either in articles of productive, or articles of unproductive consumption.
(4.iii.17) Every man having a demand and a supply, both equal; if any commodity be ingreater quantity than the demand, some other commodity must be in less.
(4.iii.18) If every man has a demand and supply both equal, the demand and supply in theaggregate are always equal. Suppose, that of these two equal quantities, demand and supply, theone is divided into a certain number of parts, and the other into as many parts, all equal; and thatthese parts correspond exactly with one another; that as many parts of the demand as are forcorn, just so many parts of the supply are of corn; as many of the one as are for cloth, so many ofthe other are of cloth, and so on: it is evident, in this case, that there will be no glut of any thingwhether the amount of the annual produce be great or small. Let us next suppose, that this exactadaptation to one another of the parts of demand and supply is disturbed; let us suppose that, thedemand for cloth remaining the same, the supply of it is considerably increased: there will ofcourse be a glut of cloth, because there has been no increase of demand. But to the very sameamount there must of necessity be a deficiency of other things; for the additional quantity ofcloth, which has been made, could be made by one means only, by withdrawing capital from theproduction of other commodities, and thereby lessening the quantity produced. But if thequantity of any commodity is diminished, a demand equal to the greater quantity remaining, thequantity of that commodity is defective. It is, therefore, impossible, that there should ever be inany country a commodity or commodities in quantity greater than the demand, without therebeing, to an equal amount, some other commodity or commodities in quantity less than thedemand.
(4.iii.19) The effects, which are produced, in practice, by the want of adaptation in the partsof demand and supply, are familiar. The commodity, which happens to be in superabundance,declines in price; the commodity, which is defective in quantity, rises. This is the fluctuation ofthe market, which every body sufficiently understands. The lowness of the price, in the articlewhich is superabundant, soon removes, by the diminution of profits, a portion of capital fromthat line of production: The highness of price, in the article which is scarce, invites a quantity ofcapital to that branch of production, till profits are equalized, that is, till the demand and supplyare adapted to one another.
(4.iii.20) The strongest case, which could be put, in favour of the supposition that producemay increase faster than consumption, would undoubtedly be that, in which, every man consumingnothing but necessaries, all the rest of the annual produce should be saved. This is, indeed, animpossible case, because it is inconsistent with the laws of human nature. The consequences ofit, however, are capable of being traced; and they serve to throw light upon the argument, bywhich the constant equality has been demonstrated of produce and demand.
(4.iii.21) In such a case, what came to every man's share of the annual produce, bating hisown consumption of necessaries, would be devoted to production. All production would of course bedirected to raw produce and a few of the coarser manufactures; because these are the articles forwhich alone there would be any demand. As every man's share of the annual produce, bating hisown consumption would be laid out for the sake of production, it would be laid out in thearticles subservient to the production of raw produce and the coarser manufactures. But thesearticles are precisely raw produce and a few of the coarser manufactures themselves. Every mansdemand, therefore, would consist wholly in these articles; but the whole of the supply wouldconsist also in the same articles. And it has been proved, that the aggregate demand andaggregate supply are equal of necessity; because the whole or the annual produce, bating theportion consumed by the shareholders, is brought as the instrument of demand; and the whole ofthe annual produce, with the same abatement, is brought as supply.
(4.iii.22) It appears, therefore, by accumulated proof, that production can never be too rapidfor demand. Production is the cause, and the sole cause, of demand. It never furnishes supply,without furnishing demand, both at the same time, and both to an equal extent.
(4.iii.23) It has been objected, that, for the validity of the argument it is necessary tosuppose, "that new tastes and new wants spring up with the new capital." A single reflection will, I think,make it clear that the taste, and wants, in question, are essentially and necessarily implied in thevery existence of the capital.
(4.iii.24) The new capital is all to be laid out in the purchase of something, according to theplans of the owner. It is of infinite importance to observe, that every creation of capital is thecreation of a demand. It is surprising that this material point is so frequently overlooked. Itseems to be little less than self evident, and if admitted, it carries in itself an answer to everyargument that has been, or that can be adduced, in favour of the glut.
(4.iii.25) What is it that we mean, when we say the demand of a nation, speaking of theaggregate, and including a definite circle of production and consumption, such as that of a year?
