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ARE WE LIVING ON CAPITAL? 293
more than made good during the five years after the
clos,?f the war down to 1870, and the nation must
in a~a~ition have created new capital to the extent of
1
£2,800,000,000 sterling. My conviction is, however,
that at no time during the civil war itself could the
capital of the nation have been diminished. Great ex-
penditures were being incurred to carry on the war, and
there was a great diversion of labour from other pur-
suits to carry it on, but the'expenditure, great as it was,
must have been borne out of the income of the country,
and did not 'prevent the investment of new capital in
houses, in factories, in railway construction, and in other
public works.
The increase of capital here referred to, it must also
be remembered, is an increase that took place after
aIJowing for any diminution that may have occurred in
the Southern States of the Union which were defeated,
and were, no doubt, in a state of great exhaustion at
the end of the war. Whatever diminution may have
been due to this cause, the figures stated allow for it,
the Southern as well as the Northern States of the
Union being comprised in the return. Probably enough,
the exhaustion of the south may have been exaggerated
from the present point of view. The capital of the south
was not, in fact, destroyed by the war any more than
the capital of the north, because it consisted so largely
of land and property which could not run away, and
what was injured was really the fringe of the capital,
and not the main capital itself. The moment peace
was restored means were found to resume industry
almost as if there had been no war.
The next illustration I propose to give is that of the
Franco-German war, which involved an enormous out-
lay during the short period it lasted and, probably,
cost France, according to a calculation which I made

1 Some deduction ought perhaps to be made from the latter sum
on account of the depreciation of paper money, which was the money
of the country in 1870, but after all allowances the increase would
still be enormous.