66 ECONOMIC ESSAYS IN HONOR OF JOHN BATES CLARK 
and use them. If they are not forthcoming, an increased flow of 
money into the coffers of entrepreneurs may not increase the 
physical amount of capital, but only raise the prices of the 
constituent “capital goods.” * Thus for certain purposes, to find 
if capital can be increased, we must look to the supply of facili- 
ties for the production of the capital goods on which the funds 
in question are destined to be spent. America’s war-effort to 
make guns, airplanes and ships is an illustration of the kind of 
limitation we are considering. There was no lack of funds, but 
the mobilization of funds far outstripped the fastest possible 
mobilization of the machines-to-make-the-machines to make the 
guns and other specialized equipment. The limiting factor was 
not capital in a financial sense, but physical capacity to make 
capital goods. 
If the capital goods are available, certain kinds and amounts 
are selected and fitted together into what is really a new organ- 
ism: the productive equipment of a going concern. This main- 
tains its existence by the process of replacement. It may be 
viewed as investment, at original of reproduction cost; or it may, 
finally, be viewed as capitalized earning power or as rights 
therein; these being the last but not the least important members 
of this family of concepts. 
Where the problem is static, most of these different phases of 
the process involved in capital may be ignored, and attention 
focussed on original savings and on the resulting fund of pro- 
ductive equipment. No error is involved in assuming that the 
loan fund of purchasing power goes hand in hand with original 
savings and automatically calls into being a corresponding 
amount of capital goods, while there would be no discrepancies 
between original cost of equipment, reproduction cost, and 
capitalized value of earning power. Earning power would depend 
on technical productivity and not on other factors. An interest- 
ing test of this proposition is found in the fact that Bohm- 
Bawerk’s concept of a time-period of production and J. B. Clark’s 
concept of a fund of technical equipment are for static purposes 
so close together that there is a prima facie case for the position 
that they are in effect identical and interchangeable, in the realm 
1 An extreme assertion of this fact is found in Veblen: Absentee Owner- 
ship, pp. 86-8. His view here is like that variant of the wages-fund theory 
in which the wages-fund consists of goods destined to be consumed by 
labor. Veblen implies a capital-goods-fund of similar character.