After that adjustment was made, every form of steam-driven machinery became a mechanical possibility.

Time does not permit us to mention all even of the really important adjustments which have been made for the greater utilization of the pressure of steam on a movable piston. The economical conversion of mechanical power into electricity and of electricity back into mechanical power has enabled us to utilize power in a variety of ways which formerly were impractical, besides giving rise to an electrical industry of vast proportions. The internal-combustion engine has made possible automobiles and flying machines.

Roads. The subject of roads and tracks would furnish an interesting study to supplement a study of power. The better the track, of course, the less power it requires to move an object. This would include everything from the air and the ocean, railway tracks, paved streets, and dirt roads down to the lubricated grooves, cylinders, and sockets through which the parts of a machine are made to move. Roads, streets, and railway tracks will be discussed under the head of transportation. The rest must be left to the imagination of the student.

CHAPTER XII

ECONOMIZING LABOR (CONCLUDED)

BY THE USE OF CAPITAL

What is capital? Capital has come to play a very important part in modern industry. This increase in importance has been so great as to lead to the impression that capital has come into existence only in recent times. That which is essentially capital has been in existence as long as tools have been in existence, but it has taken on a new and very distinct importance since the rise of machine production.

As a factor in the modern economic system, capital may be defined as wealth, other than land, which is used by its owner to secure an income rather than for direct enjoyment. Land and other natural agents are usually treated as though they were in a class by themselves and are carefully distinguished from the products of human industry and enterprise. These products of industry and enterprise are again subdivided, according to the uses to which they are put, into producers' goods and consumers' goods. Producers' goods include all tools, machines, buildings, appliances, and other forms of equipment

Wealth

Land

Products

Producers' goods.

Capital Used or consumed by their owners

Consumers' goods {Let, rented, or hired to others

which are used for the production of other goods; while consumers' goods, on the other hand, include only such goods as are used for direct enjoyment rather than for the purpose of producing other goods. Capital includes all producers' goods and some consumers' goods. It includes all producers' goods

because they are used for the purpose of increasing the owner's income. It also includes some consumers' goods because some of these are used by their owners for the purpose of securing an income. A pleasure automobile, for example, which is let for hire is a consumers' good from the standpoint of society; that is, it is not used to produce other goods but is used for direct enjoyment and satisfaction. From the standpoint of its owner, however, it is used to get an income. He gets no consumers' satisfaction out of it, but he gets paid for its use, and this payment is a part of his income. In short, he keeps it for the sake of the income which it brings him. A dwelling house is likewise a consumers' good from the standpoint of society, but if it is rented, it is capital to its owner. He gets no direct satisfaction out of it. He gets money for its use. This money is a part of his income.

Social capital and private income. Some writers have accordingly spoken of two kinds of capital: first, social, or productive, capital; and, second, private, or acquisitive, capital. Social, or productive, capital is identical with producers' goods; private, or acquisitive, capital includes such consumers' goods as are let, rented, or hired by their owners to other people. Consumers' goods, of course, are just as useful as producers' goods, but they are used for different purposes. Therefore private, or acquisitive, capital is just as useful as social, or productive, capital. The owner is just as well entitled to his income in one case as in the other. Capital, then, is goods, but it is that portion of the produced goods in the possession of society which is used by its owners for the purpose of securing income rather than for the purpose of direct enjoyment. It is used by its possessors, however, as distinct from its owners, either for the production of other goods or for direct enjoyment. The possessor of a rented shop is using the shop for productive purposes; the possessor of a rented dwelling house is using it for purposes of direct enjoyment.

Capital a class of goods, not a fund of value. Capital is sometimes conceived of not as a class of goods but as a fund of value.

There are two reasons which lead naturally to this form of statement, but there is danger that this way of thinking may lead us into serious error. In the first place, however capital may have originated historically, one nowadays usually comes into possession of it first in the form of money; that is, the owner of the automobile, the dwelling house, the shop, the factory, usually spent money in order to get it. The possession of money gives one the opportunity to come into possession of these other forms of capital. The purchase of these various forms of capital is usually called investing capital. After one has purchased a shop or a factory, a house which one intends to rent to someone else, or any other income-bearing property one is said to have invested his capital. That sounds as though the money were the capital which one had invested. That is not strictly true. One has merely exchanged one form of capital for another.

Money one form, but only one form, of social capital. The last statement implies that money is a form of capital. This has sometimes been disputed. To be sure, money is not the only form of capital, but it is one form. While it is not correct to say that capital is money, it is correct to say that money is capital. A work horse is likewise a form of capital, but it is not proper to say that capital is a work horse. There is this difference, however, between money and work horses. Very few capitalists ever find that the greater part of their capital is in the form of work horses. Almost every capitalist nowadays finds, at one time or another, that a large part of his capital is in the form of money or has passed through that form. He is continually buying and selling, receiving money and paying out money, and is not receiving work horses and paying out work horses.

Money may be said to be a tool or a means by which the community can do more work than it would be able to do without it. It is, therefore, like other tools, a form of capital. It is also a very important form of capital, one which is continually coming into the possession of every capitalist and be

ing paid out again. This leads naturally, as suggested above, to the inference that capital consists of a fund of value, or of value expressed in terms of money. While there is no objection to continuing to speak of investing capital when one is only exchanging money for other forms of capital, still one must be on one's guard against assuming that capital is anything else than goods. It is well to remember also that stocks, bonds, mortgages, etc. are not capital, but only evidences of ownership of capital. The shares of the stock of a railroad company, for example, are not themselves capital; they are only evidences of ownership in the railroad itself, which is the real capital.

Another reason which leads naturally to thinking of capital as a fund of value is found in the fact that capital, like all wealth, is measured in terms of value and its quantities expressed in terms of money. There is no good way of saying how much capital there is in any community or in the possession of any individual except by saying it in terms of money. If any capitalist were asked how much capital he possessed, and he were to answer in terms of tons, or cubic feet, or yards, or any other unit of physical measurement, he would not convey any clear or definite idea. Therefore, if you ask any business man to state how much capital he uses in his business he can answer you intelligently only by saying so many dollars or so many dollars' worth. This is a mere quantitative expression. If, however, you were to ask him in what his capital really consists he could answer you intelligently only by giving you an inventory of the various goods which make up his fund of capital. The only exception to this case would be the money lender, whose capital consists solely of money.

Pure capital and capital goods; pure weight and weighty objects. One may, however, reject the idea that capital is money and still persist in the idea that it is a fund of value. The distinction has sometimes been made between pure capital and capital goods, pure capital being a fund of value embodied in the goods, and capital goods being the things themselves in which that fund of value is embodied. The value of the goods