as usual is being put into the upkeep and repair of our railways,
factories and other industrial tools. But at the same time an enormous
amount of new machinery is being created for the manufacture of
munitions and other stuff needed for the war, and a large part of this
new machinery ought to be available as industrial capital when the war
is over. Those people who talk so glibly of the enormous destruction
of capital by the war are surely making a mistake common to minds
which look at economic questions through a financial telescope,
mistaking money for capital. They see that an enormous amount of money
is being spent on the war, and they jump to the conclusion that this
money, if not spent upon the war, would have been put into capital
investments and so have increased the tools and equipment of industry.
In fact, a great deal of the money now spent upon the war would
have been spent, if there had been no war, not upon increasing the
equipment of production, but upon purely frivolous and extravagant
consumption. There is no need to dwell on the effect of war in
reducing many kinds of expenditure on which hundreds of millions
must have gone in peace time, and this restriction of extravagant
consumption has to be deducted before we even admit, not that all
money spent upon the war is destroyed capital, but even that all the
money spent upon the war is destroying what might otherwise have
become capital.

If, then, it is true that the war is not making a very terribly
substantial inroad upon the mass of existing capital, how is it going
to affect the supply of capital in the future? To answer this question
we have to see how capital is created. The answer to this question is
very simple, very obvious, and very dull. Capital can only be created
by saving.