capital than it is with wealth. Money cannot in itself perform any part of the office of capital since it can afford no assistance to production (?) To do this it must be exchanged for other things, and anything which is susceptible of being exchanged for other things is capable of contributing to production in the same degree. What Capital does for production is to afford the shelter, protection, tools and materials which the work requires, and to feed and otherwise maintain the labourers during the process. These are the services which present labour requires from past, and from the produce of past, labour. Whatever things are destined for this use- destined to supply productive labour with these various prerequisites-are Capital.

*

"The distinction, then, between Capital and not Capital, does not lie in the kind of commodities, but in the mind of the capitalist-in his will to employ them for one purpose rather than for another; and all property, however ill adapted in itself for the use of labourers, is a part of capital as soon as it, or the value to be received from it, is set apart for productive employment."

Thus Mr. Mill fully agrees in the distinction that capital is not any particular thing, but that whether any article is capital or not, entirely depends on the method in which it is employed; and he also says that any thing which can be exchanged, and all property set apart for production, may be capital-admissions we shall find hereafter to be of the most important consequence.

We need not quote any more writers, as they say nothing different, but we may gather that, with few exceptions, they acknowledge that nothing is absolutely capital, but that whether it is so or not, depends upon the method of its use, or employment.

This would be perfectly satisfactory as a general definition, but it will be seen, they all clog the definition with the limitation that it is the fruit of past labour. Thus we think the spirit of these definitions may be expressed thus:

Capital is wealth accumulated from past labour, and employed in a particular way.

Now this definition violates the first canon we laid down regarding the formation of conceptions, it is not general, it is limited, for it is not wealth in general, but wealth the fruit of past human labour.

The question is to consider whether this limitation is necessary and essential, or whether it is accidental and may be rejected.

Now we observe that though it is true that a great portion of existing capital may be the result of human labour, it is perfectly manifest that the first capital men possessed, was NOT the result of human labour.

When man was first placed upon the earth, it is undoubtedly certain that he found the means of support already prepared for him. This is a conclusion that all must agree in. The most ardent sticklers for the literal interpretation of the first chapter of Genesis, and the most sceptical of geologists, are unanimously of opinion, that, however, or whenever, man appeared on the earth, he found fruits and corn, and cattle, and fish, already on the earth prepared for his use. No one can allege that the first cattle, the first fruits, or the first corn were the result of human labour.

Mankind, therefore, employing part of these for immediate use, and setting aside and reserving another portion for increase, for reproduction, for producing something for future use, immediately turned them into CAPITAL, which was not the result of human labour.

Moreover, though flocks and herds may be appropriated and tended, and may be kept for the purpose of increase, it seems to us to be a most violent abuse of language to say that cattle, a species of capital,-in fact, a corruption of the word—are the fruits of accumulated human labour.

We may say the same of fruit-bearing trees; they are capital, but cannot properly, as we think, be called the fruits of human labour. The same is true of corn, though there is more human labour employed about that: it seems to us to be an incorrect use of language to call corn the result of human labour. Man indeed may plant and water, but is it man who makes the corn grow? Paul may plant and Apollos may water, but it is God that giveth

the increase.

Now no doubt it is undeniably true that a great quantity of capital is the result of accumulated human labour: but as we have shewn that all original capital, and a great portion of existing capital, is not the result of human labour, it manifestly follows that the limitation "the accumulation of past human labour," is not the essence, but the accident of capital, and must be rejected

from the general definition. It is a very strong instance of the great general law in Inductive Logic, that in framing conceptions and axioms the negative instance is the stronger of the two.

In fact it is quite clear that to insert the qualification, "the produce of past human labour," is to give a description of how it was got: and many authors content themselves with telling us what things they consider to be Capital. Now, we do not want a description of how capital is got, nor an enumeration of what things are Capital, but we want a CONCEPTION, or DEFINITION, of what Capital is.

We conclude, therefore, that the definition of Capital must be disembarrassed of the condition with which it is clogged, it is the intrusive idea which must be eliminated, and we have as the general conception of Capital, that it is any Economic Quantity used for the purpose of profit.

We shall find that it is of the greatest importance to the right comprehension of the whole of Economics to have this clearly understood, and we shall see that a great deal of confusion and misapprehension has been caused in the science by this erroneous limitation. Mr. J. S. Mill says that anything which may be exchanged may be capital in the same way that money is, and in several places he says that bank notes may be capital; and how are bank notes, or credit, of which they are one form, the accumulation of past human labour? There are abundance of things which may be exchanged, and which give a profit which are in no way the result of past human labour.

Examination of Mr. Mill's four fundamental propositions respecting Capital.

30. Having thus obtained a general conception of Capital, we should have proceeded with the exposition of the subject, but Mr. Mill has laid down' what he calls four fundamental propositions respecting Capital, which we must examine. These four fundamental propositions are:

1. That industry is limited by Capital.
2. That all Capital is the result of saving.

3. That although saved, and the result of saving, all Capital is nevertheless. consumed, i. e., destroyed.

Principles of Political Economy, B. I., c. 5.

4. That what supports and employs Productive Labour is the Capital expended in setting it to work, and not the demand of purchasers for the produce of the labour when completed. Demand for commodities is not demand for labour.

Mr. Mill's first proposition that industry is limited by Capital is taken from Smith, who says "The general industry of the society never can exceed what the capital of the society can employ. As the number of workmen that can be kept in employment by any particular person must bear a certain proportion to his Capital, so the number of those that can be continually employed by all the members of a great society must bear a certain proportion to the whole Capital of that society, and never can exceed that proportion. No regulation of commerce can increase the quantity of industry in any society beyond what its capital can maintain." To this we may observe that Smith expressly says, as we have seen, that trade can be extended in proportion to the stock and the credit of the trader, and he classes paper currency under Capital. Now in modern times nineteen-twentieths, or probably it would be far nearer the truth to say that ninety-nine hundredths of industry is carried on by credit. Unless Credit be admitted to be Capital this proposition is entirely false.

With respect to the second proposition, that all Capital is the result of saving, it has been already disproved. It is only some Capital that is the result of saving. Besides many other things that might be named, the infinitely greater proportion of modern commerce is carried on by means of Credit, which we shall abundantly shew every Economist, including Mr. Mill, declares to be Capital. Now how is Credit the result of saving? This proposition is, therefore, not only not fundamental, but absolutely erroneous.

The third proposition that although saved, and the result of saving, all Capital is nevertheless consumed (i. e., destroyed), is if possible even far more erroneous.

The Duke of Bedford and the Marquis of Westminster are the proprietors of vast districts of ground on which London is built. This ground yields them enormous revenues; it is therefore capital to them. How is it consumed?

1 Wealth of Nations, B. IV., c. 2.

The great Joint Stock Banks of England and Scotland trade by means of their credit; every writer in the world who knew what he was writing about, has fully understood and said that the Credit of a Bank is capital to it, because it makes all its purchases and all its profits by means of its Credit. How is its credit consumed?

A great author writes a work. The copyright of it is capital to him, the result of labour; or he sells the copyright of it to a publisher, and it becomes the publisher's capital. It may no doubt be destroyed by an act of the Legislature; but how is it consumed?

A person by his skill discovers some valuable trade secret which brings him in great profits. This trade secret is partnership assets and capital. How is it consumed ?

A professional man or a trader buys the practice or the goodwill of a business; this is capital to him: how is it consumed?

The street crossings in London are valuable property, or estates, just like land. They are bought and sold; they are bequeathed; they form the subject of marriage portions; just like other estates in land. How are they the result of saving; how are they consumed?

The proprietor of land discovers a mineral spring on his land. This spring is found to be beneficial in many diseases. People crowd to it, a great demand for houses springs up, and the land produces a large revenue to its owner. It is therefore capital. How is it the result of saving? The spring flows on for ever; how is it consumed?

A Dock, a Canal, or a Railway Company collect subscriptions from their Shareholders; this is their capital: they then expend that capital in excavating the dock, or the canal, or in forming the railway. The dock, the canal, and the railway then become their capital, and no doubt require a certain sum to be expended in maintaining them in repair. But how are they consumed?

We might give several more instances, if necessary, to shew that it is wholly erroneous to say that it is a fundamental proposition respecting capital that all capital is consumed. But the above are quite sufficient to show that it is only a partial truth.

Mr. Mill's fourth fundamental proposition respecting capital is stated thus':-"We now pass to a fourth fundamental 1 Book I., ch. 5, § 9.