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support their families will increase their comforts. If they save in one thing, 

 they will expend more on other things. Confined to the bare necessaries of 

 life before, they will very properly indulge in a few comforts. But there can 

 be no doubt that, when once saving becomes practicable, accumulation is the 

 result. This accumulation it is which adds annually to the wealth of all 

 countries which are still progressive. But even this accumulated wealth 

 requires fi^rther analysis, because it is not all accumulated wealth, the benefit 

 of which spreads throiighout the country. Mere accumulated wealth is not 

 capital. If the man who saves upon his general expenditure during the year 

 expends the whole or a portion of his savings in purchasing books, pictures, 

 plate, and jewellery, the portion so expended remains still in the condition of 

 wealth. They are " material productions of capital and labour possessing 

 exchangeable value." By the purchase of such things, the purchaser has given 

 employment to the pi'oducers of the articles once only. They then remain in 

 his possession in a dormant state. But if, instead of purchasing such articles 

 of wealth as are destined thus to lie dormant in his hands, he devotes a part, 

 or the whole, of his savings to the extension of his business ; or if he hand it 

 to others to be productively employed, such portion is continually reproduced, 

 and it continues to set labour in motion so long as it is so employed. The 

 portion of wealth so employed is called capital, or, in other words, the term 

 capital is confined to that portion of wealth which is employed directly or 

 indirectly in productis^e industry. There is no doubt that spendthrifts are not 

 so unpopular as they ought to be. " They do good to trade," it is said ; but in 

 truth, they do good to trade only once, while the more prudent, who save and 

 invest, do good to trade many times ; as often, indeed, as their capital is 

 reproduced with the ordinary profits. Of course the wretched miser who saves 

 only to hoard does no good to trade, or to anybody or anything else. But 

 such hoarding is rai-e in modern times, and the most miserly, now-a-days, employ 

 or invest their savings in some way, so as to reap a profit, and this, as I have 

 shown, is to apply their wealth as capital. 



I have said that capital may be employed in stimulating production, and 

 giving employment to labour indirectly as well as directly. If the person who 

 saves be not himself engaged in any reproductive pursuit he probably invests 

 his savings in a bank, or in some other dividend-paying institution. His 

 money, so invested, finds its way into the hands of the active producer ; thus 

 he stimulates production indirectly. It is by no means difiicult to understand 

 in what manner money nominally lying in banks always operates beneficially 

 in stimulating productive enterprise, and in giving employment to labour. 

 A man who has a good balance at his banker's, for which he cannot find direct 

 employment, is apt to say, " I have so much money lying idle at my banker's ," 

 but in truth it does not lie idle. If the banker kept the whole idle — if he did 

 not lend it to those who can profitably employ it, "dividend" would be a word 



