Capital gain

“ The 'gain derived from capital,' within the definition, is 'not a gain accruing to capital, nor a growth or increment of value in the investment, but a gain, a profit, something of exchangeable value proceeding from the property, severed from the capital however invested, and coming in, that is, received or drawn by the claimant for his separate use, benefit and disposal.' United States v. ”

“ Arbitraging transactions, as between different places, time-speculation, transferring labor and capital from one enterprise to another, increasing the supplies of some goods and reducing the supplies of other, changing land from wheat to corn, etc., etc.,—all these things are sources of gain, and they will be done, whatever the origin of the values involved. The new, dynamic enterprise, before it becomes actualized in concrete machinery, factory building, etc., and long before its income is actualized in money-receipts from the goods it is destined to produce, becomes an object of value. ”

“ All capital is justly and rationally invested which supports productive labor (that is to say, labor directly producing or distributing good food, clothes, lodging, or fuel) ; so long as it renders to the possessor of the capital, and to those whom he employs, only such gain as shall justly remunerate the superintendence and labor given to the business, and maintain both master and operative happily in the positions of life involved by their several functions. And it is highly advantageous for the nation that wise superintendence and honest labor should both be highly rewarded. ”

“ It proves that the employer can afford to give high wages to the laborer, in consequence of the profits of his business, and the borrower high interest to the lender, in consequence of the gain which he makes by the use of capital. On the contrary, in countries where business is dull and languishing, and all the walks of society are full, the small profits that are made will not justify high interest or high wages. ”

“ In addition, especially in the area of capital gains, if you have a fair capital gains rate, which is what we have today, it causes people to go out and sell an investment which they might otherwise hold on to. ”

“ Interest is the price paid simply for the use of capital. But what is capital, and in what does its use consist? What claim has it to be regarded as an independent factor of production? Our very familiarity with the term, our habit of employing it with the rich looseness of every-day life is an obstacle to the clearness of thought, which is again essential. We recognize, most of us, clearly enough that capital, although we reckon it in terms of money, consists, like income, of real things; factories, machinery, materials and the like. ”

“ It is not less difficult to pronounce how far the effect of any given quantity of money, as capital, or in other words, as a medium for circulating the industry and property of a nation, may be increased by the very circumstance of the additional motion which is given to it by new objects of employment. ”

“ To make their industry most effective, and to enable them, individually, to put into their own pockets as large a portion as possible of their own earnings, they need, on an average, one thousand dollars each of money capital. ”

“ This then, though small, is something definite that we can contribute to the material advancement of mankind and, like the duty in this connection to our nation, to our families and ourselves, it consists in creating capital; that is, earning as much as we can and, in any event, even if our earnings are fixed, managing the income thriftily, and carrying forward as large a net result as possible. ”

“ And so, if I use my own capital in directly aiding production, as by machinery, or in indirectly aiding production, in exchange, I receive a special and distinguishable advantage from the reproductive character of capital, which is as real, though perhaps not as clear, as though I had lent my capital to another and he had paid me interest. ”

“ The use of capital consists in its advance. It goes before all operations of labour and trade. It is the power that sets labour and trade in motion; just as the power of wind, or water, or steam, gives movement to wheels and pistons.
Let us briefly see how capital operates upon the three great branches of human industry, namely, upon agriculture, manufactures, and commerce.
A farmer having acquired capital, either by the former savings of himself or his fathers, or by borrowing from the savings of others, takes a certain number of acres of land. ”

“ No, labor consumes all of the total product that its wages will buy back.
"Two billions are left to capital. After it has paid its expenses, does it consume the remainder? Does capital consume all of its two billions?" ”

“ Therefore in the accumulation of wealth, so far as it arises from the saving by anyone of the products of his labour, from his bequest of this capital to another who farther adds to it by saving some of the profit which the capital yields, as employed in the payment for labour or in trade either by the capitalist himself or someone to whom he lends it, and from the continuation of this process through generations, there is nothing which tends to lessen for anyone else the possibilities of ownership. ”

“ I have been endeavouring to get you to admit that the profits on stock employed in manufactures and commerce are seldom permanently lowered or raised by any other cause than by the cheapness or dearness of necessaries, or of those objects on which the wages of labour are expended. Accumulation of capital has a tendency to lower profits. ”

“ Likewise, social changes, new needs, the growth of population, increase the net income of wealth, or the rents of a business. The basis of capital value is income, and whatever be its cause, political or economic, material income can and will be capitalized and added to the market value of the privilege, wealth, or industry on which the income is conditioned. ”

“ Variable capital, v, is the annual wages bill. Surplus, s, is annual rent, interest, and net profit, so that v + s represents net national income. (In this introduction surplus is used interchangeably with rent, interest and net profit.) Constant capital, c, represents at the same time the contribution which materials and capital equipment make to annual output, and the cost of maintaining the stock of physical capital in existence at the beginning of the year. ”

“ The temptation to save from revenue to augment capital is always in proportion to the rate of profits, and, if from accumulation of capital profits [Pg 40] and interest should fall very low indeed, at that point accumulation would nearly stop, because it would be almost without an object. ”

“ Whether the ten thousand pounds thus employed are capital or not, will depend on what is done with the amount by the ultimate receiver. If the children invest their fortunes in a productive employment, or the mortgagee on being paid off lends the amount to another landholder to improve his land, or to a manufacturer to extend his business, it is still capital, because productively employed. ”

“ His real wealth is in proportion, not to his gross, but to his neat rent.
‘The gross revenue of all the inhabitants of a great country comprehends the whole annual produce of their land and labour; the neat revenue, what remains free to them after deducting the expense of maintaining, first, their fixed, and secondly, their circulating capital, or what, without encroaching upon their capital, they can place in their stock reserved for immediate consumption, or spend upon their subsistence, conveniences, and amusements. ”

“ A certain percentage of the earnings of the business would be allotted to capital, and to cover depreciation and development, over and above which the employee-partners would participate in all profits. ”

“ Are we maintaining a reason- able equation in our balance of payments? Does a reason- able percentage of the national income go to the formation of capital and is that capital being invested in productive enterprises? ”

“ Whether, therefore, we shall find our capital again with increase, or not, is a question which can only be answered by the result; and it will at best depend upon chances of the market, which defy foresight. ”

“ Industry, commerce, shipping, and banking concentrated in the narrow area of less than 200,000 square miles, earned yearly returns equal as a rule to the total of the capital invested. Money changed hands rapidly, credits did the work of capital, and the rapid growth of population added large unearned increments to the fortunes of those who owned land or had established themselves in trade. ”

“ In the interest of conservatism and as producing certain other desirable results which will be brought out as each asset is examined in detail, cost price, if lower than market, is deemed the desirable basis for the valuation of this group. By way of explanation, it should be said that working capital as used here is the difference between current assets and current liabilities and so represents the portion free to be put to the further pursuit of business. ”

“ But no nation or any class of people is perfect, and there is one money-making device which seems to me not quite sound in principle. To increase the capital of a corporation new shares are sometimes issued, without a corresponding increase in the actual capital. ”

“ It has already been shown that capital, saved by thrifty folk, is essential to industry as society is at present built and worked; and the financiers are the people who see to the management of these savings, their collection into the great reservoir of the money market, and their placing at the disposal of industry. ”

“ Increased capital, therefore, implies increased saving; and hence the laws may be determined which regulate the increase of capital by considering the causes upon which depends the increased saving or accumulation of wealth. There are two principal motives which induce men to save; and these are, first, a prudent foresight with regard to the future; and, secondly, a desire to make wealth by an advantageous investment. which may be due to two motives—foresight and desire for profit.The first motive is by far the more powerful. ”

“ Production on a large scale is greatly promoted by the practice of forming a large capital by the combination of many small contributions; or, in other words, by the formation of stock companies. The advantages of the principle are important, [since] (1) many undertakings require an amount of capital beyond the means of the richest individual or private partnership. ”

“ If they want to regain their former wealth they must adopt the same methods by which wealth is created elsewhere; they must produce more, much more than they spend, and they must carefully husband and gradually accumulate their surplus earnings. That is the way to create wealth and capital available for future production. ”

“ Industry has created wealth as with the touch of a magic wand; and this rapidly growing wealth has been made available capital through the instrumentality of the corporation which, by means of stocks and bonds, has gathered into giant organizations the property of hundreds and even thousands of individuals. The industrial corporations have been greatly assisted in their work of concentrating and applying capital, by the banks and other institutions that have enlarged credit and made a given amount of property capable of performing a much larger work. ”

“ In the question under discussion it is important to distinguish between an absolute increase of capital or an accession of real wealth and an artificial increase of capital as an engine of business or as an instrument of industry and commerce. In the first sense a funded debt has no pretensions to being deemed an increase of capital ”

“ That portion which he annually saves, as, for the sake of the profit, it is immediately employed as a capital, is consumed in the same manner, and nearly in the same time too, but by a different set of people: by labourers, manufacturers, and artificers, who re-produce, with a profit, the value of their annual consumption. ”

“ How much then is the case strengthened, when we consider that these transformations of capital are of the nature of improvements in production, which, instead of ultimately diminishing circulating capital, are the necessary conditions of its increase, since they alone enable a country to possess a constantly augmenting capital without reducing profits to the rate which would cause accumulation to stop. ”

“ Now, the owner of the valuable, having transformed it into capital from this motive, is under a commercial necessity to hire laborers, in order by their help to make his capital yield a profit. Capital lying idle decreases in value even, to say nothing of its yielding no increase to itself; and the motive of the capital-owner, accordingly, is strong [192] and constant to buy the services of laborers, to marry these services with his own capitalized products, and thus to produce commodities for sale, whose value shall be greater than the present value of the capital and the services combined. ”

“ Say and I would say that by turning revenue into capital we shall obtain both an increased supply and an increased demand; but, if the same capital be so created, I do not approve of its present application, and taking it out of the hands of those who know best how to employ it, to encourage industry of a different kind and under the superintendence of those who know nothing of the wants and demands of mankind, and blindly produce cloth or stockings of which we have already too much, or improve roads which nobody wishes to travel.... ”