Page:Manual of Political Economy.djvu/89

 40 Manual of Political Economy. BOOK I. CH. IV.

Circulating and fixed capital.

extremely impolitic to tax a raw material. Suppose it were determined to raise a certain sum by taxing cotton, a tax on cotton goods would be far preferable to a tax on raw cotton. If a manufacturer were obliged to pay lOOl. upon a certain quantity of raw cotton, he would thus have to give to the Government lOOl. which he intended to employ as capital, and therefore the tax would be entirely taken out of capital. But suppose the Government said, We will let you manufacture your cotton, and then you shall pay us the same amount, by levying a tax upon the manufactured goods. The result of the tax would be, that the price of cotton goods would rise, the manufacturers would be able to pay the tax out of the increased price obtained for their goods, and the tax would not, under these circumstances, in any degree diminish the capital of the manufacturers.

It will have been remarked, that every kind of wealth, which in any way assists future production, has been, in this chapter, described as capital. Capital, therefore, is not confined to the food which feeds the labourers, but includes machinery, buildings, and, in fact, every product due to man's labour which can be applied to assist his industry; but capital which is in the form of food does not perform its functions in the same manner as capital that is in the form of machinery: the one is termed circulating capital, the other fixed capital. This is a real distinction from which many important consequences follow. Circulating capital is only used once in order to fulfil any particular purpose; fixed capital may continuously repeat the assistance which it lends to industry. A store of food fulfils the functions of capital when it feeds labourers, but in feeding the labourers it is consumed; it cannot repeat the service which it has rendered. But the same looms, set in motion by the same steam-engine, will continue to weave cotton cloth through a long succession of years. The same ploughs till the land for many successive crops. The capital with which a road is made does not facilitate the transport of wealth for any limited period; but, if a slight sum is spent to keep the road in repair, it will permanently serve the same industrial purposes. The capital expended on the great irrigation works of India, may,