The term capital is used in a number of different senses, two of which we shall take note of here. Capital originally meant money which was loaned and from which interest was received. But since interest might be received for other forms of wealth than money, the term gradually expanded to include all loans of wealth. Finally economists came to think of capital as wealth from which an income was received whether it was loaned or not. We shall speak of capital in this sense, that is, wealth from which an income is received, as acquisitive capital. Since interest is often paid for the use of wealth which is not used productively, acquisitive capital is not always productive capital.

In a second sense the term capital is used to designate goods which have been themselves produced and which are to be used in the further production of wealth. Capital in this sense is productive capital. When we are thinking of capital from the point of view of the nation, or of society as a whole, we usually have in mind productive capital. Productive capital, therefore, is social capital, since its productivity represents a net gain to society, and acquisitive capital is usually thought of as the individual's capital because the gain to one individual may mean a loss to another, leaving no net gain to society.

Productive capital includes many things which are not included in acquisitive capital, and acquisitive capital ineludes many things which are not included in productive capital. Thus, if the nation digs a great canal and throws it open to the use of the world on equal terms, and if this canal saves hundreds or thousands of miles in the transportation of commodities, the nation has created productive capital. But it has not created acquisitive capital, for the reason that no individual is able to get an income from its control. On the other hand, if a private individual claims and establishes the right to charge a toll on all vessels passing a certain point in a river, his right to collect toll is for him capital, i.e. acquisitive capital, but it is not productive capital. It produces an income for him, but it does not produce income for the nation as a whole. Here are an example of productive capital which is not acquisitive capital and an example of acquisitive capital which is not productive capital. As we proceed, however, we shall find that the great mass of productive capital is also acquisitive capital. In the present chapter on production we shall consider capital mainly as productive capital. In the later chapters on distribution we shall be concerned with capital as acquisitive capital.