Page 289 - clra62_0019-(GIPE)

ARE WE LIVING ON CAPITAL?
capital, or lives upon its capita], what is meant is, either
that the nation does not properly repair and renew
machines, houses, and other property of a fixed kind,
or that some of the more perishable property, such as
the flocks and herds of an agricultural community is
actually consumed, so that at the end of a given period
there are fewer things in existence constituting the
capital and wealth of the community than there were
at ,the beginning. In these ways, and no other, can a
community or nation waste its capital or live on its
capital. As far as individuals are concerned, A may
be poorer and all the other letters of the alphabet
richer, the aggregate property remaining the same, but
when we deal with a community as a whole, there
must be an actual diminution of the aggregate wealth
or property to constitute a waste of capital.
To be quite accurate, we must allow, of course, for
the changing population of a community. If the num·
bers of a community are constantly increasing, and the
capital remains the same without any actual diminution,
then at the end of a given period there is less capital
per head of the community than there was at the be·
ginning. In other words, a community which is con·
stantly adding to its numbers must be constantly adding
to its capital, if things are to remain in equilibrium. If
the addition of capital again is not equal to the addition
of numbers, there may still be some" diminution of cap~
ital per head, although not so great as in the case where
no addition is made whatsoever to the capital. While
noticing these refinements, however, we must recognize
that the broad fact to be kept in mind is the necessity
of an actual diminution or deterioration of the things
which constitute capital relatively to the numbers of
the population in order to establish a waste of national
capital in a particular case.
There is no doubt the exceptional case which has
been referred to of a nation parting with securities or
properties it possesses to other nations, in exchange for
consumable commodities, which are, in fact, consumed.