LIVING ON CAPITAL 91 



speak disapprovingly of such a man is perhaps 

 allowable, but to do so for the reason that he 

 is living on his capital is misleading. Every man 

 lives on his capital, and must do so; but this 

 man is living on the yielding part of his capital, 

 the principal. Of course it would not matter 

 what particular terms we used, so long as we 

 all used the same terms for the same ideas, and 

 clearly understood each other's meaning. That 

 really does matter; we must understand the 

 underlying facts in every case. In this case that 

 principal gives birth to interest, as the sown 

 wheat gives birth to the harvest wheat; and 

 that both principal and interest are capital, as 

 both the sown wheat and the harvest wheat are 

 capital. 



It is useful here, the matter being of the utmost 

 importance to any one who would understand 

 these questions, to insert, as a sort of note, the 

 possible objection that this allocation of capital 

 seems to contradict the general assertion that 

 capital is produced only by the destruction of 

 capital. There is no other way. What makes 

 an import more valuable than an export? It 

 is the expenditure of the capital of the ship- 

 owner and of his men, in carrying that import 

 from one country to another, in converting an 

 export into an import. So it is with principal and 

 interest. If the principal, when not encroached 

 on, continues to produce interest, how is it that, 

 both principal and interest being capital, the 

 principal is not destroyed ? But it is. The 

 principal is annually destroyed, and reappears 



