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
