[Sidenote ◆1 To understand how much of the gross product is made by Capital, it will be well to turn from agriculture to manufactures;] [Sidenote ◆2 As Capital plays in manufactures a more obvious part.] ◆¹ Land, which in economics means everything that the earth produces and the areas it offers for habitation, is of course in a sense at the bottom of every industry. But if we wish to understand the case of Capital, it will be well to turn from agriculture to industry of another kind; the reason being that the part which Capital plays in agriculture is not only, comparatively speaking, small, but is also a part which, when we are first approaching the subject, is comparatively ill fitted for purposes of illustration. ◆² What is best fitted for the purpose of illustration is Capital applied to manufactures; and it is best at first not to consider all such Capital, but to confine our attention to one particular part of it. I must explain to the reader exactly what I mean. [Sidenote ◆1 Capital, when actually employed, is of two kinds:] [Sidenote ◆2 Fixed Capital, such as plant and machinery; and Wage Capital.] [Sidenote ◆3 The Capital embodied in machinery is what, for our present purpose, we must first consider.] ◆¹ People constantly speak of Capital as being a sensitive thing—a movable thing—a thing that is easily driven away—that can be transferred from one place to another by a mere stroke of the pen. We all of us know the phrases. But though they express a truth, it is partial truth only. Capital before it is employed, when it is lying, let us say, in a bank, to the credit of a Company that has not yet begun operations—Capital, under such circumstances, is no doubt altogether movable; for before it is employed it exists as credit only. ◆² But the moment it is employed in manufacture, a very considerable part of it is converted into things that are very far from movable—into such things as buildings and heavy machinery; and only a part remains movable—namely that reserved for wages. For example, M’Culloch estimates that the average cost of a factory is about _one hundred pounds_ for every operative to be employed in it; whilst the yearly wages of each adult male would now on the average, be about _sixty pounds_. Thus, if a factory is started which will employ _one thousand_ men, and if the wages of all of them have to be paid out of Capital for a year, the amount reserved for wages will be _sixty thousand pounds_, whilst _a hundred thousand pounds_ will have been converted into plant and buildings. Most people are familiar with the names given by economists to distinguish the two forms into which employed capital divides itself. The part which is reserved for, and paid in wages, is called “Circulating Capital”; that which is embodied in buildings and machinery is called “Fixed Capital.” Of Circulating Capital—or, as we