210 PRINCIPLES OF RURAL ECONOMICS 



a good thing for the community to have this surplus wealth to 

 be used in future production. 



How capital is increased. That the future increase in the 

 number, the power, and the effectiveness of the tools of the com- 

 munity requires a present surplus of production over consump- 

 tion may be shown by the following considerations : (i) In order 

 that the number of tools may be increased, a larger share of the 

 productive energy of the present must be turned toward the 

 making of tools than would otherwise be necessary. This larger 

 productive energy does not come from nowhere ; it is simply 

 subtracted from that which is engaged in producing consumers' 

 goods, thereby reducing that share. The community must be 

 able to live in the present on the consumers' goods produced by 

 a part of its productive energy, the rest being directed toward 

 the making of tools, which do not support life in the immediate 

 present, but in a more or less prolonged future. In the com- 

 munity at large, therefore, a surplus of productive power over 

 the needs of present consumption is absolutely essential to the 

 increasing of the supply of tools. (2) In the present order of 

 society the community as a whole does not usually decree that 

 this share of its productive energy shall be turned aside from the 

 production of consumers' goods and set to work producing tools. 

 In a few cases this is done, such as in the maintenance of light- 

 houses, roads, canals, and public works' of various kinds ; but 

 it is ordinarily done by individual initiative. Some individual 

 considers whether he would better spend all his income for 

 consumers' goods or a part of it for producers' goods. If he 

 does the former, he, to that extent, directs productive energy 

 toward the production of consumers' goods. But where he 

 decides to spend a part of his income for producers' goods, 

 either directly or through savings institutions, he, to that ex- 

 tent, directs productive energy toward the making of producers' 

 goods or tools. 



