30 PROCEEDINGS OF THE CANADIAN INSTITUTE. 



because all have drawn upon the earth, or upon those having the care 

 of their early life. The capital so stored in men will produce good, 

 bad or no return, according as it is used, or allowed to remain idle. 

 The terms capital and labour are misleading, inasmuch as they do not 

 explain the relationship between the pei'sons to whom they are 

 applied. The distinction is one of tense only, " Separate ca2:)ital " 

 being the exponent of past labour, " vital capital " the exponent of 

 present labour. Vital capital is lent for a consideration to be paid in 

 separate capital. Interest on vital capital (wages) is of the nature of 

 a life annuity, the purchase price of which corresponds to the total 

 " vital capital," upon which the interest (wages) is paid. Neither 

 class of capital is productive, nor is it safe in the absence of the 

 other. The employer borrows, the workman lends, vital capital. Both 

 are capitalists, one producing present, the other expending past 

 labour. 



Mr. Douglass said that one difficulty in discussing the sub- 

 ject of capital arises from the ambiguity of the term. Perry in 

 his Political Economy says, one of the characteristics of 

 capital is its power of growth, thus a hundred of capital at five 

 per cent, becomes two hundred in about fifteen years. But 

 capital docs not increase. Food is consumed, clothes wear 

 out, machinery wears out. The one characteristic we can 

 affirm almost universally of capital is that it does not increase, 

 it diminishes. When Perry therefore says capital increases, he 

 refers not to ths capital, but to ownership. A similar ambiguity 

 occurs in the writings of Bagehot when he says that capital is 

 readily convertible. But we cannot convert wheat into iron, 

 ships into stove, or railroad iron into overcoats. Capital is not 

 convertible, but ownership is. Thus, before we can make any 

 headway in discussing capital we must very closely distinguish 

 the exact sense in which we use the term. 



