Page:Walter Renton Ingalls - Current Economic Affairs (1924).pdf/216

202 The definition of the wealth may be extended so as to include some non-physical, intangible things, such as organization, good-will, patent rights and even mere knowledge.

All wealth is not capital, which is only that part of wealth that is devoted to the production of more wealth. Thus, the parks of our cities are wealth, but are not capital. Railways are capital. Both municipal parks and railways are wealth, but neither of them is money, or funds. Gold is wealth, capital and money and is the only thing corresponding with those three descriptions. Although it is an enormously important factor in economics it constitutes but a small proportion of the world’s wealth. The physical wealth of the United States is about 275 billion dollars in terms of values of 1913, but it comprises only about three billions of gold, or a little more than one per cent. The total gold of the world is only a little more than 10 billion dollars.

Capital assumes two general forms, viz. fixed and liquid. The former comprises those creations that can be used only for the purpose intended, such as railways and factories. The latter comprises the stocks of goods, together with gold, which may be employed for any desired purpose in the production of new wealth. The liquid capital is always the smaller proportion of the total. In the United States, for example, I have estimated it to be in recent years no more than 10 per cent of the total wealth.

Credit is different from either capital or funds. It is based on wealth and may be considered as a translation of wealth into working capital. Theoretically it ought to bear a relation to wealth, or rather its extension should be limited by some relation to wealth.