This section is from the "The Science Of Wealth" book, by Amasa Walker.
Is it possible that there should be a surplus of capital?
It is evident that there may become such a surplus, if we assume that production itself does not expand in the meantime. Given a certain industry, within defined limits, it * may become full and overflowing with its accumulations. By economy and thrift, these multiply fast, and crowd their barriers. Common observation shows this to be often true, with the enterprises of individuals. The excess is transferred to other branches, or withdrawn for personal gratifications. A seamstress, who, by saving, obtains a sewing machine, has a wonderful help in her industry; but a second sewing machine would not assist her a single stitch.
The same is true of special occupations. The limit of profitable production being reached, the amount of capital employed cannot well be increased. The product, being generally in the form of circulating capital, now flows off to other business, or is turned to purposes of adornment and culture.
The same is also found true, though more rarely, of entire communities. States and cities sometimes reach the limits within which they desire to use capital in their traditional industries. They become bankers for the world, or direct their profits to sumptuous houses and works of art. Such were Genoa and Venice under the merchant princes, who, having reached the boundaries of known trade, and brought all its machinery to the perfection of existing art, .began, wisely enough at first, that wonderful career of architecture, whose ultimate extravagance exhausted the industry that gave it rise, and passed the commerce of the world to traders who had not become gentlemen.
It is evident, then, that, within the bounds of present occupations, capital might easily attain a surplus, increasing as it can more rapidly than population. It is productive only as applied by labor; and therefore its production is limited by the capacities of labor.
But in fact, and on the whole of things, the limits of industry do not remain the same. Wants expand, as we have seen. Capital is relieved from its former employments, and goes on to new efforts. It can hardly multiply * fast enough to meet the growing demand. Enterprises spring up over night. Capital hardly breathes, for the work it has to do.
We believe that the time when capital shall become excessive in the world is far beyond the occasions of reasonable calculation. It is so distant at the nearest, so doubtful every way, as not to be a question in a practical science, like political economy. We are not called on to provide for the day when all the continents shall be crowded with wealth that can find no room to work. When wealth ceases to be wanted for capital, it is pretty certain to be consumed in luxury. Yet we are not to anticipate the same rapid progress at all times and everywhere which we see in a new country like our own, full of wants, and stimulated to efforts. Capital has its checks, just as population has. Theoretically, steady increase is certain in both: practically, each meets obstacles ; is lost here, and checked there. The forces which operate to stay it may be briefly summed up as follows: a certain disinclination of capital to emigrate ; the lessening power of personal supervision from a distance; and a distrust in the administration of foreign laws.
Another constant force operating against the increase of capital is found in those wants of man which do not look to reproduction. The desire to spend is just as truly in human nature as the desire to earn, and can be as accurately calculated. Hence it follows, that, as the desire to learn loses power by capital becoming plenty and cheap, the desire to spend gains force. A man is not nearly as likely to use his money for personal gratification when he can get eight per cent for it, as when he can get only four.
Yet, for all these obstacles, capital, when it has supplied the demands of labor in its own vicinity, has gone abroad to colonize. It has carried on great wars in which it had no interest, has developed the resources of infant states, and saved old nations tottering to their fall. Capital has gone round the world in the same boat with the inspired dis- coverer. It watched with Columbus the weeds drifting from an unknown land; it " stared at the Pacific " by the side of stout Cortes; it debarked with the gallant Cook, nor was it frightened at the savage violence which took his life. Like Caesar, it would not wait for the boat to come to land. It freighted vessels for countries not named; it sent fleets to ports never visited by civilized man.