INTEREST ON FARM LOANS 689 



shown by the simple comparison of prices: flour is vastly cheaper 

 (that is, the excess in price of flour over grain) than in former days. 

 So in the railway: there has been an enormous application of capital 

 that is, of previous labor with an outcome of transportation rat^s 

 so low as to prove that, taking account of all the labor of construction, 

 maintenance, and operation, its efficiency is immensely greater than 

 that of the simpler instruments of pack horse and wagon. 



This consequence has sometimes been stated by saying that capi- 

 tal is productive; a phrase which must be used with care. The 

 strictly accurate statement is that labor applied in some ways is more 

 productive than labor applied in other ways. Tools and machinery, 

 buildings and materials are themselves made by labor, and represent 

 an intermediate stage in the application of labor. Capital as such 

 is not an independent factor in production, and there is no separate 

 productiveness of capital. When in the following pages the produc- 

 tivity of capital is spoken of, the language must be taken as elliptic, 

 expressing concisely the result of the capitalistic application of 

 labor. 



Supposing capitalistic ways of production to have been so settled 

 and established as to be known to all and that they are equally avail- 

 able for all, then competition will bring the return in all channels of 

 investment to the same level. What will determine that uniform 

 level? 



All the constituent parts of capital, though they will yield the 

 same return to those employing them, will not necessarily affect to 

 the same degree the productiveness of labor. Some may be, and 

 almost surely will be, more helpful in production than others. Imagine 

 that a community, once in possession of a stock of tools and appliances, 

 is compelled to part, by successive steps, with instalments of this capi- 

 tal. Clearly it would first relinquish those parts which contributed 

 least to the efficiency of labor, and then, as more and more had to be 

 given up, would relinquish others in the inverse order of serviceable- 

 ness. It would reserve to the very last those constituents of capital 

 that is, those means of roundabout production which added most 

 to the efficiency of labor. These means the last to be given up, the 

 first to be used under existing conditions would probably be, on the 

 one hand, the agricultural processes which, in the temperate climate, 

 involve seasonal operations, such as seed and farming tools, and about 

 a year's surplus of food; and, on the other hand, the metallurgical 

 processes which yield iron, the prune requisite for almost all tools. 



