20

ECONOMIC PRINCIPLES

of the older forms of instruments, and their replacement
by other, more efficient, instruments. This substitution is
stimulated by the decrease of the marginal utility of each
individual instrument as its supply is relatively increased.
To take an example, imagine the equipment of a railroad
increased by the increase of one single item, say of locomotives.
[t hardly needs proof that the additional services capable of
being secured from each successive locomotive, when the
railroad is once fairly equipped, will steadily, perhaps rapidly,
decrease, till the stage is reached at which the cost of
additional locomotives exceeds their value to the railroad.
An increase of capital represented by locomotives might
take place, not by multiplying engines of one pattern, but
by the construction of new and more efficient patterns.
Here, too, it hardly needs proof that the utility of additions
to capital is on a decreasing scale. The same considerations
as have been applied to the case of locomotives may be
applied to other forms taken by railroad capital, such as
special classes of rolling-stock, sidings, etc. It would thus
appear that, in each particular industry, apart from new
devices in production, the utility of continued increments of
capital proceeds on a diminishing scale, and that whether
we think of specific forms which the capital may take, or
of the general increase of capital values concerned in the
industry. The introduction of new devices, or discovery of
new principles which cause a change in the processes of
production, may afford scope for the utilisation of more
capital without a diminution of its marginal utility, but
the effects of such improvements, in finding place for the
profitable introduction of additional capital, are as liable to
exhaustion as is the stock of knowledge available at any
given time. Thus we may make use of the principle of
diminishing utility as affecting capital, both specific instrumental
 goods and the group comprising all kinds of such
goods, with the same propriety as in the case of demand for
goods directly consumable. The adjustment of supply to
demand encounters some difficulties, arising out of the fact
that the instrumental goods are a means of procuring consumable
 goods at a more or less distant date, and it must,