equipment, is likely to be pretty clear and definite. This leads to the offer of high rates of interest as an inducement to capital to migrate from other communities where it is abundant in order to supply those communities where it is scarce. The possibility of using each and every unit of capital advantageously is what enables borrowers to pay the high rate of interest. The scarcity of capital relatively to other factors is what creates the opportunity for advantageous use of capital. The formula, More capital, more product; less capital, less product," is appreciated with peculiar vividness. This appreciation leads to active bidding for capital, and this to the offer of high rates of interest. The fortunate individual who can gain possession of an additional fund of capital, being able to increase his product considerably, finds it economical to pay a high rate of interest for it. If he owns his own capital, whereas his competitors in production lack capital, he will have a great advantage over them and will therefore secure a large income. According to our analysis in the chapter on The Source of Interest, this additional income which he gets from the use of his own capital is interest as truly as the income which he gets from lending his capital to someone else.

SECTION B

THE PRODUCTIVE INDUSTRIES

The chief methods by which the productive forces are made to work for our advantage

Economical Secondary industries

CHAPTER XVI

THE EXTRACTIVE INDUSTRIES

Ways of acquiring wealth. In the diagram on the preceding page the ways of acquiring wealth are divided into two main classes, the uneconomical and the economical. From the social or national point of view it is uneconomical to have men acquiring wealth by methods which do not add to the total wealth or well-being of the society or the nation. When one man gains something by plundering, swindling, counterfeiting, or monopolizing, someone else loses a like amount, and nothing is added to the total. In fact, if these harmful methods become general, it is likely to discourage honest industry and actually diminish the total production of wealth. Even the neutral methods may become harmful if they result in wasted lives; that is, if they enable men and women who would otherwise be productive and useful to live in idleness and luxury. The smaller the proportion of the people who live by means of the uneconomical methods, the more prosperous the nation is likely to become.

By the economical ways of acquiring wealth are meant all those ways by which an individual contributes to the wealth of the whole community as much as he gets. He may make his contribution by laboring either to produce commodities or to render direct service to some of his fellow men. In either case, where he gives honest service for honest pay he is enriching someone else in proportion as he is himself enriched. A nation in which this rule prevails universally, where everyone is contributing to the well-being of someone else in exact proportion as he himself prospers, has at least one of the conditions of general prosperity. If each one is capable and well trained,