A manufacturer who has fifty thousand dollars in cash uses a part of it to purchase machinery, a part to buy raw materials, and a part to pay rent and wages, etc., until he has left in cash only as much as is necessary to pay small accounts from day to day. We say that his capital was fifty thousand dollars when he had it in the form of money. It is still fifty thousand dollars when only a small portion is money. From week to week the raw material is worked up into finished products and sold. From month to month machines wear out or break down and are replaced by new ones. At the end of the year the manufacturer has still a capital of fifty thousand dollars. But he has not the same raw materials and possibly he has not the same machines. The concrete things that went to make up his capital are undergoing change but we say that he has still the same amount of capital, or, making use of an ellipsis, we say that he has the same capital. When we wish to distinguish between capital in this sense and the concrete things which go to make up the capital, we refer to the latter as capital goods.

1 It may be objected that some land is the result of production, as, for example, where a lake is filled or a swamp reclaimed, but these are the exceptional cases and they are not of sufficient importance to call for a change in our definition.