ABSTRACT
Criticizing the idea that money is wealth or creates wealth, Smith introduces the idea of capital. Capital is the part of stock that yields revenue and profits, as opposed to the part of stock used for immediate consumption. Money is a peculiar part of capital because it does not yield any revenue: it is simply the wheel of circulation of trade. Similarly banks do not increase wealth, but free resources that can be used to increase trade. Trade increases when capital can accumulate, and thus support more division of labor. That the accumulation of capital rather money is the source of wealth is also testified by interest rates, which are based on the demand and supply of capital, not of money.
