AND now for the exception which I have made to the general truth that it is only out of gold or its convertible credit equivalents that savings can arise. The reader will already have guessed where we are to look for it from what has already been said. It was our contention, it may be remembered, that savings did not arise, as Mill thought, because labour could produce more than was necessary for its support, but that they arose out of the free gifts which the powers of Nature confer on Man over and above the cost of the labour spent on the soils, machines, or processes in which these powers reside. If this be so, then it must follow that all forms of 'fixed capital,' whether of a positive or negative kind - all soils, mines, machines, factories, railways, canals, roads, bridges, ships, tramways, warehouses, etc., may justly take their place with gold or its credit equivalents as forms of wealth out of which savings can arise, inasmuch as without them less consumable wealth would be produced. Like gold and credits, they too, have a relative permanence when wear and tear is provided for, and can always be depended upon to confer both on their owners and on the nation a free gift of wealth over and above the labour spent on producing and maintaining them.

They are like national banks in which a nation may always invest its savings, and can always be depended upon to reproduce themselves with interest: and against them credits may be drawn just in the same way (although always discounted more or less of course) as against gold or silver themselves. Now it is necessary to observe at this point that the savings either of a man or a nation constitute in general no part of the wealth of the world, in the sense in which wealth is identified with that which is desired and enjoyed for itself alone. Gold and silver cannot be eaten; bank notes and credit bills can neither be eaten nor worn, nor can they afford either warmth, protection, or shelter; neither can the soil or mines or fruit trees; and less than all can the powers of Nature embodied in fixed capital, as in machinery, railways, canals, bridges, roads, merchant ships, etc. It is true that gold and silver may be worn as ornaments, and, what is still dearer to the human mind, may be used as objects conferring rank or distinction on their possessors, but when so used they can only be counted in the category of savings because it so happens that they can at any moment be melted down and converted into currency.

As for precious stones, again, used for purposes either of distinction or ornament, they too, as is seen in the wealth of Eastern potentates, are a medium in which savings can accrue, but only so long as there is no sudden revolution either in fashion or public taste in these matters, as in that event they would lose that element of relative permanency which is so essential as a bank for savings, and might be reduced at a stroke to the worthlessness of the pebbles on the beach. But my point here is, broadly speaking, that national savings do not exist in the form of consumable wealth, but only of such things as have the element of calculable permanency in them: for what is consumable is in its essence impermanent, and exists for the very purpose of being destroyed. And now we have to observe that gold and silver, bank notes and paper credits of all kinds, although material substances, are in their nature and essence ideal and mental rather than material, and, like mathematical symbols, get all their value from their conventional acceptance as standards; and they get their conventional acceptance, in turn, from their use in facilitating the movements of the wheel of consumable commodities, alike in production, transmission, exchange and consumption.

In an ideal condition of industrial society, therefore, where fraud was unknown and a mans word was as good as his bond, they could be replaced by a purely mathematical system of numbers, but not till then. As for the 'fixed capital' - soils, machinery, mines, railways, ships, etc., - on the other hand, all these are purely material in nature, and although they are placed on the wheel of wealth, and circulate around it, it is properly only those portions of them that are subject to wear and tear that can be classed with the consumable commodities which are continually being produced, consumed, and reproduced, on the wheel itself. The permanent element in them is always the same, namely the powers of Nature which they imprison and which when called upon at any time they will liberate in response to the call; as the locomotive, for example, will always respond to and redeem its obligations in, full, as it were, and in definite calculable quantities according to the amount of water and coal supplied.

These permanent powers of Nature imprisoned in fixed capital then, are to be figured not so much as actually on the wheel of wealth production and consumption, as circulating around with it, as it were, and gratuitously giving their economic services at the points where they are most wanted; in the same way as the electricity in a dynamo, although supplying all the economic power to the wheels of a factory or a motor car, may be said to exist outside of them rather than as parts of them; they belong rather to the medium in which the wheel of wealth revolves and functions, and from which it draws all its strength, than to the wheel itself which without them would be cold and dead. In fact, these powers of Nature embodied in the 'fixed capital' of a nation are themselves the consumable products of the nation which circulate on the wheel; only they have been transformed in the process. The bread is transformed wheat, the wheat is transformed soil, but the soil is fixed capital, and the fixed capital is a power of Nature; the cloth is transformed sheep, the sheep transformed grass, the grass is transformed soil, but the soil is fixed capital, and the fixed capital a power of Nature. The transportation of goods from one point to another, which is an essential part of their production, is transformed motor-power, which in turn is transformed steam and coal, but both locomotive and coal are fixed capital and powers of Nature; and so on with everything which is produced and consumed in the endless combinations in which they are served up.