CAPITAL AND INTEREST 
Re an Lh ig 
69 
The concrete way in which the element of previous labor is 
reckoned by the business world is through the charge for depre- 
ciation in cost accounts. If machinery lasts 5 years, a considerable 
item must figure in the expenses of production to make up for its 
depreciation ; if it lasts 20 years, the allowance is less, but is still 
there. Something must always be set down on this score; unless 
indeed the machinery last forever. 
Now, in the illustrative figures used in the present chapter, no 
allowance at all was made for any such item. In other words it 
was tacitly assumed that capital (machinery or what not) did last 
forever. On that assumption the only new element brought into 
the account by the introduction of capital is the returns on it; past 
labor and depreciation need not be considered. In the actual 
world, however, it must always be considered. When making 
up the complete summation of the labor given to an article, we 
must put down something for the labor of the past which has been 
given to making the tools or machinery. It will be much or little, 
according as the capital instruments last a short time or a long; 
much or little, according as depreciation bulks large or small in 
the accounts. 
Our total for the expenses of production (referring now to one 
of the previous illustrative examples), as modified by the introduc- 
tion of capital, might then be stated in some such form as this: 
INTEREST Do- 
CHARGE TorAL MESTIC 
Wages TorAL AS Ex- SuppPLY 
PER Day WAGES BEFORE PENSES Propuce Price 
10 days’ current labor = $20) 
U.S. $2 ¥ $30 810 $40 30 copper $1.33 
$ 5 days’ past labor = $10 pper_$ 
There is still more to be considered, however, than this revision 
of the method of figuring. The revised calculation (as the reader 
is likely to say) in itself adds nothing of moment. The number of 
days’ labor for the given article, and the wages item in the expenses 
of production, became greater, and the figures are readjusted 
accordingly. What really signifies lies in quite another direction. 
The use of capital means not merely that an apportionment must 
be made (perhaps somewhat intricate) of the total labor given per