"An example.--The truth of these assertions can best be shown by examples. Let us suppose that a manufacturer of woollen cloth is in the habit of spending £50 annually in lace. What does it matter, say some, whether he spends this £50 in lace or whether he uses it to employ more labourers in his own business? Does not the £50 spent in lace maintain the labourers who make the lace, just the same as it would maintain the labourers who make cloth, if the manufacturer used the money in extending his own business? If he ceased buying the lace, for the sake of employing more cloth-makers, would there not be simply a transfer of the £50 from the lace-makers to the cloth-makers? In order to find the right answer to these questions, let us imagine what would actually take place if the manufacturer ceased buying the lace, and employed the £50 in paying the wages of an additional number of cloth-makers. The lace manufacturer, in consequence of the diminished demand for lace, would diminish the production, and would withdraw from his business an amount of capital corresponding to the diminished demand. As there is no reason to suppose that the lace-maker would, on losing some of his custom, become more extravagant, or would cease to desire to derive income from the capital which the diminished demand has caused him to withdraw from his own business, it may be assumed that he would invest this capital in some other industry. This capital is not the same as that which his former customer, the woollen cloth manufacturer, is now paying his own labourers with; it is a second capital; and in the place of £50 employed in maintaining labour, there is now £100 so employed. There is no transfer from lace-makers to cloth-makers. There is fresh employment for the cloth-makers, and a transfer from the lace-makers to some other labourers."--Principles of Political Economy, vol. i., p. 102. This is very fine; and it is clear that we may carry forward the improvement in our commercial arrangements by recommending all the other customers of the lace-maker to treat him as the cloth-maker has done. Whereupon he of course leaves the lace business entirely, and uses all his capital in 'some other industry.' Having thus established the lace-maker with a complete 'second capital' in the other industry, we will next proceed to develope a capital out of the cloth-maker, by recommending all his customers to leave him. Whereupon, he will also invest his capital in 'some other industry,' and we have a Third capital, employed in the National benefit.