The Detroit times., 1916-04-24

producer. a. by an outlay OF So.
brought forth goods TO the amount
OK 100. Another producer. B. In.
another field. may similarly produce,
LOO by an outlay of so. A and b,
typifying all producers. exchange.
their finished goods with each 9TH
err When A gets back 100 Of new
goods he must. OF course, use so
out OF his gross returns to replace
the so used up in the production OF
his original 100. II 20. his capital
10 restored and he can 20 on produce,
ing another 100 in the future. So
with b. The replacement Of so In
each case Is essential to the main
tenance OF capital and industry on
its present scale.
Early in the present war: II In to
be observed, there was a violent dis
location OF capital and labor in E,s
rope. The consumption OF war sup
plies has been unparalleled and az
an expense never cqualled. IL this
merely a destruction OF wealth, Or
Is capital being destroyed to an
enormous amount?
Wars Destruction Of Capital.
IL A transfers his capital from
peaceful industry TO manufacturing
munitions of war HIS outlay OF so
yields 100 In goods sold to the gov
eminent, which destroys them on the
Observation-Disclosures. OF course, repro
ducins any Of the goods in their
place. The government. unlike B,
does not return goods to A by which
he can replace his so and thereby
go on producing in the future That
Ia, when shells explode on the firing
line AS 100. and so HIS so. are de-
stroyed forever. A In able to 70 on
producing because for his 100 he
gets from the government a promise
10 pay based upon future production
after the war, or bank notes, which
are forms Of credit dependent upon
future exigencies. Quite apart from
the external means Of payment to A,
the fact which energies and has n
sinister portent is the destruction of
As capital OF 80 and It's non.repIace-
ment,
Borrowings by the state and issues
OF bank notes TO unheard OF sums DO
not change this fundamental fact.
The capital OF the country has been
reduced. In such countries a. Great
Britain and France. whose foreign
Intercourse In practically unimpair.
ed, lost capital goods can be re-
placed by credit operations and i'm
porta from other nations. In the
case OF Germany and Austria Hun.
gary. in the degree that they are
cut OF from foreign trade they are
unable TO replace destroyed capital
goods. except In 70 far a. articles
can be made within their own boun-
aries.
II should be kept In mind, hog.
ever. that the analysis made above
In concerned only with what n
known IA movable, or circulaAtng
capital-which ID obviously very
large. Such capital stands opposed
to fixed capital in the form Of ships,
bridges, docks. factories, machinery
and the like. In Belgium, Poland,
Galicia. Serbia, and northeastern
France there has also been . serious
destruction OF fixed capital. In Ger
many, Great Britain. Italy, and most
Of France. where enemies have not
entered, fixed capital In intact, and
at the close Of the war II could b.
Immediately used, provided there ID
supplied the necessary labor force
and enough circulating capital to
provide materials. wages. and the
like.
In order TO reach any conclusion
as In the continuance OF the war n
Is necessary TO have before us the
fundamental analysis above given
Then II will be possible in the next
paper TO make application OF these
results TO the beIligerents like Ger
many, France. and Great Britain.
professor Laughlin's second arti-
! Gle OF this series win show that
only economic. not financial, exhaus.
ton can stop the war;
1
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