Chapter 14 Chapter 1 Division of Assets

If a man has only enough to live on for a few days or weeks, he seldom thinks of using it for income, but spends it with great care, hoping that he will be able to spend it before it is exhausted. Rely on your own labor to obtain something as a supplement.At this moment, all his income is his labour.Poor working people in all countries generally live this kind of life. And if a person has enough money to live on for several months or years, he will naturally think of obtaining income from most of the money, and using a proper part of it to maintain his life before income is obtained. .Thus, his assets were divided into two parts.That part of it which he wishes to derive income from is called capital; that part which he employs in consumption is called means of subsistence.

Subsistence materials include the following three categories in total.First, the assets reserved for living consumption; second, the income gradually obtained through various methods; third, the items purchased with the above two types of assets and which are still usable, such as quilts, furniture, etc.Assets reserved for consumption may contain all three or some of the above. Capital, which provides income or profit to investors, can be used in two ways: First, to produce, manufacture, or buy things.Investors rely on selling these items to make profits.While such capital remains in the hands of the owner, it affords no income or profit to the investor; nor does the investor receive income or profit if the goods of the merchant are not sold; even if the goods are sold and money is obtained remuneration, but if the money is not exchanged for goods, the investor also receives no income or profit.Investors' capital is in constant flux, being spent in one form and withdrawn in another.It is this continuous exchange and circulation that makes investors profitable.This type of capital is called working capital.Second, to improve the land and to buy useful machines and implements.This type of capital is called fixed capital, and it generally provides a profit without changing hands or requiring further circulation.

The proportion of fixed to circulating capital may vary greatly in different occupations. Take the merchant, whose capital is almost entirely circulating capital.If a shop or a warehouse can be called a machine or a tool, it is their only machine or tool. Handicrafts and manufacturers, on the other hand, require a part of their capital to be expended in tools.However, the size of this portion can vary widely across industries.For example, in the tailoring industry, the labor tools of the laborers are only a pack of needles.Compared with the tailoring industry, the tools of the shoemaking industry are more expensive, but their quantity is also limited.The tools of the weaving trade are more expensive than those of the shoe trade.Much of this capital is mobile.They may flow out in the form of workers' wages, or they may be used to purchase raw materials; their inflow is in the form of product prices containing profits.

Some enterprises require a much greater fixed capital than handicrafts and manufactures.For example, in order to operate a large iron and steel plant, it is necessary to spend a huge amount of money on the purchase of iron melting furnaces, forges, and cutting yards.If it is to mine coal mines, it will also need to spend more money to purchase water suction machines and other various machinery. For the farmer, the capital used to buy furniture is fixed capital, which he keeps in his hands; the capital used to maintain his workers and pay their wages is circulating capital, which he pays out.Both types of capital can provide him with profits.Farm animals have the same price or value as agricultural tools, and they are also a kind of fixed capital; while raising livestock, like maintaining workers' livelihood, also requires an expense, which is included in circulating capital.Therefore, the farmer's way of obtaining profit is to keep and raise livestock.

If the farmer buys and raises livestock for the purpose of selling them instead of farming them, then this expense should be included in circulating capital, because he makes a profit by selling the livestock.In those countries that produce livestock, if people buy cattle and sheep only for profit through shearing, milking, breeding and farming, rather than for the purpose of selling, then the livestock at this time should be classified as fixed capital. classes, the way to profit from them is to keep them.The cost of maintaining them is fluid, and only by paying the maintenance fee can they generate profits.The maintenance fee and the profit of the whole price will all be provided by the price of wool, milk production, multiplication and contract farming.Seeds also count as fixed capital.Because it only flows between the land and the barn, and its owner has not changed, so its flow is not a real flow.Therefore, the way for farmers to make profits is not to sell seeds, but to sell the products produced by seeds.

The total wealth of a country or a society, that is, the wealth of all its inhabitants, is naturally divided into the following three parts, each of which has a special role. The first part is reserved for consumption.This part of capital does not provide income or profit, and it includes food, clothing, furniture, and houses used only for habitation, etc., which have been purchased by consumers but not yet fully consumed. Take a house only for living as an example. If the house invested by the investor is only for his own living, then at this time, the property loses its role as capital and cannot provide the investor with any income or profit.Such houses, like clothing and furniture, though very useful to him, afford him no income, but only a part of their expenses; and though the owner may receive rent by lease, the house itself produces nothing.For the tenant, the rent paid to the landlord must be obtained from labor, capital or land.Therefore, a house can be used as capital that can provide income to the owner only when it is leased, but it does not provide any income to the general public, so it cannot be included in capital.

The same goes for clothes and furniture, which sometimes provide income and are therefore considered capital for some.Take clothes, for example. Where masquerade parties are popular, there are people who rent out masquerade clothes on a one-night basis.Another example is furniture. Furniture merchants often rent furniture on a monthly or annual basis.Funeral goods can also often be rented out by the day or by the week in funeral shops.In addition, furnished homes are rented out so that the owner can collect rent and a fee for the use of the furniture.All in all, this kind of loan event can be seen everywhere.

But the revenue from the letting of such things ultimately comes from other revenues.Another thing to note is that, of all the resources set aside for consumption by individuals and by society as a whole, that part of the capital invested in houses consumes the slowest.If a house is not only solidly constructed but also well maintained, it can last for hundreds of years.Clothes are different, they can only be worn for a few years; furniture can only be used for fifty to one hundred years.Even so, houses, like clothes and furniture, are still assets intended for consumption only. The second part is used as fixed capital.This part of capital can provide income or profit even if it does not circulate or change owners.It mainly includes the following four classes: First, all convenient machines and implements that help to save labour.The second is all buildings that can provide profits.Such buildings generally include shops, warehouses, factories, farm houses, stables and barns, etc., which not only directly provide income for the owner, but also serve as a means for tenants to obtain income.Because they are specially used for business, and they are quite different from houses that are only used for living.The third is land.The land, improved by profitable means of reclamation, drainage, enclosure, and fertilization, can become like a useful machine, which not only facilitates cultivation, but saves labor, and returns to the investor much greater than its investment. working capital.Improved land is as useful as machinery, only improved land lasts a long time whereas machinery wears out faster.In order to improve the land, the farmer needs only to invest the capital required for cultivation in an advantageous manner, because the land basically needs no other repairs.The fourth is the effective ability mastered by all the people.To acquire this talent requires a school education, or an apprenticeship, which costs a considerable sum of money.However, once this cost is invested, it appears to be fixed on the learner.These talents are not only part of his personal property, but also part of the public property of society.The increased dexterity of the workman is as much a part of the fixed capital of society as are the convenient machines and implements which save labour.It is true that people have to spend a certain amount of money to acquire this talent, but once the talent is mastered, it can not only repay the cost, but also provide profits.

The third part is used as working capital.The means by which this part of capital provides income is to circulate and change masters.It also contains four categories.One is currency.Only through the circulation of money can the turnover of the other three types of capital be realized and finally distributed to real consumers.The second is food.Such foodstuffs mainly include those provided by butchers, stockmen, farmers, grain merchants, and brewers, etc., and can provide them with profit.The third is the materials used to make clothes, furniture and houses.They may be in the hands of the cultivator, the maker, or the cloth merchant, lumber merchant, carpenter, bricklayer, and so on.This category of capital includes all raw and semi-processed materials not yet made into finished products.The fourth is items that have been made into finished products but have not yet been distributed to real consumers.Items of this kind, probably still in the hands of manufacturers or merchants, consisted chiefly of items displayed in smithies, woodworkers, goldsmiths, gemstoners, chinamakers, and various other shops.Money, therefore, and the provisions, materials, and manufactures in the hands of various merchants, constitute the whole circulating capital.Among them, money determines the circulation and distribution of food, materials and finished products.Without currency, they cannot reach consumers smoothly.

Of these four classes of circulating capital, the three classes of food, materials, and manufactured goods are usually transformed into fixed capital, or assets for human consumption, within a year or so. Fixed capital is transformed from circulating capital and requires continuous replenishment of circulating capital.All useful machinery or implements, for example, are purchased with circulating capital.Before the machine is finished, the material for making it, and the cost of maintaining the workers who make it, are supplied by circulating capital;Moreover, the materials of work, and the food for the subsistence of the worker, are supplied by circulating capital.Once there is a lack of working capital, even if there is fixed capital, it will not be able to generate income.For, without a circulating capital, even the most useful machinery or implements cannot work, and produce nothing; so, without a circulating capital, no improvement in the land can afford an income.In addition, there must be working capital in order to maintain the livelihood of the cultivator and harvester.

Whether it is fixed capital or circulating capital, it has one and only one purpose: to increase the resources reserved for consumption without scarcity.The food, clothing and shelter of the people are provided by these resources; the wealth of the people is also determined by the amount of these resources that these two kinds of capital can provide. The fixed capital of society, and the assets set aside for consumption, may at any moment be in need of replenishment.At this time, it is necessary to draw out most of the working capital to meet this demand.In this way, working capital also needs to be constantly replenished, otherwise it will soon dry up.There are three main sources of circulating capital: land products, mine products and fishery products, which can continuously provide food and materials, or semi-finished products of food and materials.This supply replenishes the food, materials, and manufactures drawn out of the circulating capital.In addition, metal must be extracted from the mines to maintain and replenish the required quantity of money.Though money generally need not be withdrawn from circulating capital to be employed as fixed capital, nor retained as a stock of consumption, yet it is subject to wear and tear as well as other things, or is exported abroad, and therefore has to be constantly replenished.Currency replenishment is much smaller compared to food and materials, though. Operating land, mines, and fisheries also requires fixed and circulating capital.The products of these industries must not only pay back the capital and profits invested by investors, but also pay back other capital and profits in society. For example, the food and materials needed by the manufacturers every year are provided by the farmers, and the industrial products needed by the farmers every year are provided by the manufacturers.Although the direct exchange of manufactures and agricultural products between these two classes is seldom, but in fact, the exchange between them does year by year.We all know that farmers have corn, livestock, flax, wool, etc., but lack clothing, furniture, tools, etc.In real life, people who buy grain, livestock, flax, and wool do not necessarily own clothes, furniture, and tools that can be exchanged with farmers.Therefore, if the farmer wants to have the manufactures he needs, he must first convert the products of his land into money. Fishing and mining, too, require a capital at least in part supplemented by land.Because, whether it is fishing from the water or digging minerals from the ground, it needs to consume land products. When the natural productive forces are equal in size, the amount of capital invested and the use of funds determine the output of land, mines, and fisheries; The factor of output becomes natural productivity again. If the life of the citizens of a country is relatively stable, then the citizens are generally willing to spend some of the resources available for their own use, in order to enjoy the present life or pursue future profits.If you want to enjoy life, those assets will be reserved for consumption; if you want to use those assets to pursue future profits, you can keep those assets in your hands temporarily, or use them directly for investment.When assets are reserved for consumption, it is fixed capital; when assets are temporarily retained or invested directly, it is circulating capital.A man would be insane if he did not use all the means at his disposal for these purposes, when his life and property were so secure. If a country's autocratic and tyrannical monarchy makes it possible for people's property to be violated at any time, then the people will often hide most of their assets.In this way, when the disaster they are always on guard against strikes, they can always take these assets to a safe place.This kind of thing is said to be very common in Turkey and India, and I believe it is also very common in other Asian countries.It seems that in the era of feudal tyranny in England, there was also such a situation.At that time, a large part of the income of the monarchs of the major countries came from the excavation of treasures.As long as the unowned items buried in the ground at that time belonged to the king, unless they were authorized by the king, they belonged to the discoverer or the landlord.At that time, gold and silver mines were also given great attention like this kind of underground treasure.Under normal circumstances, gold and silver mines do not belong to ordinary land, and must be explicitly licensed to be mined.In contrast, mines of lead, copper, tin, coal, etc. are not so important, and people can mine them at will.