Capital value

“ 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. ”

“ A baby who could be reared to take a place in the class X would have a capital value of thousands of pounds. The capital value would be like that of land of different degrees of natural advantage, but none of it yet exploited. ”

“ The capital is not an ideal, fictitious, arbitrary sum of meney set down in the articles of association, but, in the theory and practical operation of the system, is composed of substantial property, and which gives value and solidity to the stock of the institution. ”

“ 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. ”

“ Investment is a pecuniary transaction, and its aim is pecuniary gain,—gain in terms of value and ownership. Invested wealth is capital, a pecuniary magnitude, measured in terms of value and determined in respect of its magnitude by a valuation which proceeds on an appraisement of the gain expected from the ownership of this invested wealth. In modern business practice, capital is distinguished into two coördinate categories of assets, [Pg 353] tangible and intangible. ”

“ Those who possess money are in a position to take toll, in values, from those who wish to get rid of the goods which they have produced, and to get hold of the goods which they wish to consume. The holders of money do this by means of the money, and under the laws of economic imputation, these gains are attributed to the money itself, first in the form of a rental value, and sometimes, under conditions later to be discussed, as increments to capital value. ”

“ 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. ”

“ If a property earns only its operating expenses, including therein proper depreciation reserves, taxes, and such a percentage on its actual invested capital as could be earned by that capital if invested in good non-taxable bonds or other like security, it is worth no more than its physical property is worth. If it earns more than that, it is due to the franchise, going concern, or other intangible elements of value, and, to determine that value, capitalize the surplus. ”

“ He merely receives a certain value in money, for an equivalent value in goods. Neither does this give employment to his capital; for there never exists more capital than can find employment, and if one person does not buy his goods another will; or if nobody does, there is over-production in that business, he can remove his capital, and find employment for it in another trade. ”

“ 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. ”

“ Nothing, I submit, can be plainer than the fact that the value of the capital stock of a corporation represents all its property, franchises, good will,-indeed, everything owned by it wherever situated. ”

“ Returning to the question of interest on actual capital,—i.e., the excess of value produced over the cost of production,—the question as to what determines the value of a product leads to the assertion that capital-profit must be due to an advantage which the producer possesses over the marginal producer. ”

“ In proportion as fixed capital is less durable, it approaches to the nature of circulating capital. It will be consumed in a shorter time, and its value reproduced in order to preserve the capital of the manufacturer. ”

“ I want property that earns money. You might say that there is water in Western Union, and so there is. There is water in all this property along Broadway. This whole island was once bought for a few strings of beads. But now you will find this property valued by its earning power, by its rent power, and that is the way to value a railroad or a telegraph. So it is worth what it earns now, a capital that pays seven per cent.”
160
“That would be $100,000,000?”
“Yes, and it is worth much more than that, because there are a great many assets.” ”

“ If, for instance, a sum of £100 has this year been converted into capital, and produced a surplus-value of £20, it must continue during next year, and subsequent years, to repeat the same operation. As a periodic increment of the capital advanced, or periodic fruit of capital in process, surplus-value acquires the form of a revenue flowing out of capital. ”

“ Now as before the variable capital, as a fixed amount of money, will put in motion an appropriate quantity of living labour, that is to say it serves to employ the appropriate quantity of constant capital in production and to produce the corresponding amount of surplus value. ”

“ In view of the special language employed in section 207, obviously for the purpose of avoiding appreciated valuations of assets over and above cost, the argument that such value is as real as cost value, and that in the terminology of corporation and partnership accounting 'capital and surplus' mean merely the excess of all assets at actual values over outstanding liabilities, and 'surplus' means the intrinsic value of all assets over and above outstanding liabilities plus par of the stock, is beside the mark. ”

“ The profit is shared between the banker, who receives interest, and a succession of borrowers, mostly for short periods, who, after paying the interest, gain a profit in addition, or a convenience equivalent to profit. The capital itself in the long run becomes entirely wages, and, when replaced by the sale of the produce, becomes wages again; thus affording a perpetual fund, of the value of $200,000,000, for the maintenance of productive labor, and increasing the annual produce of the country by all that can be produced through the means of a capital of that value. ”

“ The surplus value which has been appropriated, after it has successfully cast off its commodity-form in the market, appears as a given amount of money. This money-form is the form of its absolute value, the beginning of its career as capital. ”

“ Capital is money: Capital is commodities. [13] In truth, however, value is here the active factor in a process, in which, while constantly assuming the form in turn of money and commodities, it at the same time changes in magnitude, differentiates itself by throwing off surplus-value from itself; the original value, in other words, expands spontaneously. For the movement, in the course of which it adds surplus value, is its own movement, its expansion, therefore, is automatic expansion. Because it is value, it has acquired the occult quality of being able to add value to itself. ”

“ He requires capital because implements and stock are wanted, and because he must have money, or some other property in hand which he converts into money, in order to pay the wages of his labourers; although a farmer estimates his capital in money, he obtains the amount of this estimate by ascertaining the pecuniary value of the various items of which his capital is composed. ”

“ The question must still be, whether the surplus, after defraying expenses of a given capital, employed in the purchase and improvement of a piece of land, is greater or less than that of a like capital employed in the prosecution of a manufactory; or whether the whole value produced from a given capital and a given quantity of labor employed in one way be greater or less than the whole value produced from an equal capital and an equal quantity of labor employed in the other way ”

“ 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. ”

“ 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. ”

“ Gold and silver, like other commodities, have an intrinsic value, which is not arbitrary, but is dependent on their scarcity, the quantity of labour bestowed in procuring them, and the value of the capital employed in the mines which produce them. ”

“ "And be it enacted, by the authority aforesaid, that when the said contributors shall have met and chosen their managers and treasurer, and shall have raised by their contributions a capital stock of —— value, (the yearly interest of which is to be applied to the accommodating of the sick poor in the said hospital, free of charge for diet, attendance, advice, and medicines,) ”

“ I call those first-rate which are composed of treasures one possesses under one's hand, such as mines, lands, and funded property, in such states as France, Austria, and England, provided these treasures and property form a total of about a hundred millions; I call those second-rate fortunes, that are gained by manufacturing enterprises, joint-stock companies, viceroyalties, and principalities, not drawing more than 1,500,000 francs, the whole forming a capital of about fifty millions ”

“ 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 is as much capital as if it belonged to B. A is really a farmer or manufacturer, not personally, but in respect of his property. Capital worth ten thousand pounds is employed in production—in maintaining laborers and providing tools and materials—which capital belongs to A, while B takes the trouble of employing it, and receives for his remuneration the difference between the profit which it yields and the interest he pays to A. This is the simplest case. ”

“ Conclusion.—The problems of valuation are vital to any business and intimately concern its financial integrity. In order to maintain at least the original capital investment in a business, it is necessary to make provision for the decrease in asset values due to different causes. The financial management of the business must watch this feature closely, else capital will be dissipated and the business rendered incapable of performing the functions for which it was organized. ”

“ As is true of good-will and credit extensions generally, so with respect to the good-will and credit strength of these greater business men ; it affords a differential advantage and gives a differential gain. In the traffic of corporation finance this differential gain is thrown immediately into the form of capital and so is added to the nominal capitalized wealth of the community. ”

“ In a word, what the company says is income shall be income, and what it says is capital shall be capital.' 'In most if not in all cases, the inquiry as to the time when the profits were earned by the company is an immaterial one as between the tenant for life and remainder-man. ”

“ As capital was of the utmost importance to my success in business, I decided not to increase the foregoing scale until I had acquired a certain capital, after which I would give one quarter of all net profits, great or small, and, on the acquisition of another certain amount of capital, I decided to give half, and, on acquiring what I determined would be a full sufficiency of capital, then to give the whole of my net profits. ”

“ 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. ”

“ 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. ”