CAPITAL-GOODS AS A FACTOR IN PRODUCTION 307 



article of production, say a spade. He who buys a spade becomes a 

 capitalist to the amount of a dollar that is, he becomes an owner of 

 tools.. The process is precisely the same, whether the amount in 

 question is a dollar or a million dollars. If he does not have the dollar, 

 his only chance of getting the spade is either to borrow it or borrow 

 the money with which to buy it. 



There are only two ways of securing capital for the equipment of 

 a farm. One is to accumulate it oneself, by consuming less than one 

 produces; the other is to borrow it. The advantage of borrowing is 

 that one does not have to wait so long to get possession of the tools 

 and equipment. One can get them at once and make them produce 

 the means of paying for themselves. Without them, the farmer's 

 production might be so low as to make it difficult ever to accumulate 

 enough with which to buy them. With their help, he may be able to 

 pay for them --that is, to pay off the debt in a shorter time than it 

 would take to accumulate the purchase price without them. That is 

 the only advantage of credit in any business, but it is a great advantage 

 to those who know how to use it. 



There is no magic about credit. It is a powerful agency for good 

 in the hands of those who know how to use it. So is a buzz saw. 

 They are about equally dangerous in the hands of those who do not 

 understand them. Speaking broadly, there are probably almost as 

 many farmers in this country who are suffering from too much as 

 from too little credit. Many a farmer would be better off today if 

 he had never had a chance to borrow money at all, or go into debt for 

 the things which he bought. Shortsighted people, who do not realize 

 how inexorably the time of payment arrives, who do not know how 

 rapidly tools wear out and have to be replaced, or who do not keep 

 accounts in order that they may tell exactly where they stand finan- 

 cially, will do well to avoid borrowing. Debts have to be paid with 

 deadly certainty, and they who do not have the wherewithal when the 

 day of reckoning arrives become bankrupt with equal certainty. 

 However, that is no reason why those farmers who do know how 

 to use credit should not have it. 



97. RURAL THRIFT AND THE CAPITAL FUND 



It is customary to point out in discussions of the capital factor, 

 that the ultimate determinant of the size of the capital fund is to be 

 found in the degree of thrift which a society possesses. It is then 



