Of the Virtues of Frugality

Abstract

Smith exalted the virtue of ‘frugality’ as the maxim of the commercial age. Those who sought to grow their businesses could do so only by the gradual accretion of what they could save from the revenue earned from their relatively meagre stock. There was almost no active market in shareholder funds. What the merchant or manufacturer saved he invested in his own ventures or loaned it to somebody else in their business. How else would they grow it?

Whatever part of his stock a man employs as a capital, he always expects his to be replaced to him with a profit. He employs it, therefore, in maintaining productive hands only; after having served in the function of a capital to him, it constitutes a revenue to them.¹