CAPITAL, in trade and political economy, is in its restricted sense applied to the money, or the property convertible into money, with which a trader or producer car ries on his business. In this sense, Adam Smith and many other writers call it stock; and there is a convenience in having a separate term for expressing this sense of the word C., since it is totally different from its wider sense as an element in political economy. 3lany attempts have been made to define C. in its general sense, but with very imperfect success, since no sooner is a restrictive definition laid down, than some one can point at things which are C., and yet are not included in the definition. It has, for instance, been called the produce of past labor stored up and applied to the facilitat ing of future labor; but, as we shall see, many things become C. which the hand of man 'has never touched. There is no doubt, however, that the existence of C. arises out of the fact of labor or industry having been exercised; and perhaps a good general under standing of its character may be derived from treating it as the impulse or impetus which past industry gives to facilitate future industry. Wherever something is reserved from immediate consumption, and niade to serve in future production, there is capital. We cannot have a better illustration than in the first bow and arrow made by the savage. He has expended on this machine for securing his food a portion of the time and labor which he might have given to the tedious task of catching his food with his own hands, and at this sacrifice he has obtained the means of more easily and economically obtain ing it in future. All C. is not, however, directly made by the industry of the owner, or, indeed, by industry at all. The accidental finder of a diamond, or a pearl, worth £100, possesses so much capital. His acquisition, however, would have no value but for those productions of industry which it is permitted to represent, and if pearls and diamonds were often found, they would cease to be valuable; the trade of finding them is as labo rious and as ill remunerated in the long--run as most others. The owner of a barren heath, which was intrinsically worth nothing, finds it become suddenly valuable by the progress of a large town; but it is the industry of that town which has given the value, and theowner having the good-fortune to have a hold on a portion of the produce of that industry, becomes a capitalist. It is impossible to enumerate all the elements of which C. in the general sense consists, or all the ways in which it can be made. What ever thing done enables some other thing to be done which supplies any of the necessi ties or wishes of the human race becomes capital. Thus, the education and skill of the barrister, the physician, and the artist—the agility, acquired through long and toilsome practice, of the rope-dancer and the juggler—all are capital. It makes C. to shift the place of a thing, bringing it from where it is not, to where it is, wanted. So, also, the changing of a person's place may become C. to him, as where he leaves a district iu which his trade is not required, or exceeds the demand, for one where he can pursue it to advantage. Successful emigration thus creates C., bringing into human use districts of land which previously lay useless. The total C. at any time in existence consists of an aggregate of the several capitals at the command of individuals or communities. But it is essential to any unit of C. that it should be sufficient for the purpose it is intended for, otherwise it may seem to be, but will not in reality be, a part of the general aggre gate—it will, in fact, be lost. If an expenditure of £1000 be necessary to raise a sunk ship, and only £900 are expended, that sum, which might have been available for some other purpose, is lost. C., as distinguished from property or wealth, is a moving force;
and if it be not sufficiently strong for accomplishing its purpose, it is lost. This is one of the most important truths in all political economy, since most of the great losses suf fered by communities and individuals arise from for which they have not adequate C., or for which that which seems to be C. does not really turn out to be so. Perhaps the most memonible mistake of this kind ever made was when the French revo lutionary government issued assignats (q.v.). These were ostensibly issued on a good security—namely, the security of the forfeited land. But, however valuable that laud night be in the long-run, it was not available to pay the assignats; there was no purchaser for it; and the assignats consequently fell in value. Gold to a far less amount than the money value of the land—that is to say, than the price which would be paid for it when sold in the natural course of things—would have been a sufficient C. for the issue of these assignats. The same mistake is often exhibited ou a small scale when a landed proprietor keeps together a large estate which he cannot afford to improve and cultivate properly. It loses its power of C. in his hands; and he would be much better off if he sold a portion of it for money to be invested in improvements on the remainder. Probably 19 out of every 20 bankruptcies arise from the bankrupts having undertaken enterprises beyond the reach of their C.—from over-trading, or over-speculating, as it is otherwise called. When speculation becomes epidemic, the whole community suffers from undertakings too great for its C., and a crisis occurs. Such was the great railway crisis of 1847. Parliament had, in the previous year, passed bills for the construction of railways, which, if they had all been made, would have cost upwards of £130,000,000 a sum which the country, rich as it was, could not afford to advance. Though it is an axiom that people cannot trade beyond their C„ yet what can be accomplished by any given amount of C. must depend on the skill and sagacity of the person employing it. Competition no doubt tends to equalize profits, but competition is itself a contest in which each tries to drive a more profitable trade than his neighbors, and some are more successful than others. A frequent element of success is the rapid circulation of C., by which it is made to return many profits, though perhaps small ones, in the course of the year. The trader who turns over his C. ten times at a profit of 3 per cent, makes more than he who draws a single profit of 10.
If the nature of C., as the produce of past and the promoter of future industry, were better understood by the working-classes, they would be saved from much unhappiness and mischief. Whatever C. may be to the rich man, it is bread itself to the working family. The withdrawal of the C. embarked in the cotton trade alone would starve millions; and yet many educated men have endeavored to teach working-people that C. is their natural enemy. Its strength may no doubt be sometimes used for evil purposes, but none save evil results can arise from destroying it. The only way in which any man can effectually protect himself from such mischief as he supposes it may do, is to save, and become a participator in it, Itself the result of industry, it is a more powerful instrument in the hands of him who has made it than in any other's. The savings of working-men are the best laid out C. in the world. The first pound laid past is the most profitable of all—it represents freedom from debt, and the capacity of its owner to pur chase what he wants with ready money—a privilege probably bringing him a profit of many pounds, or many hundreds per cent upon his capital.