449. The different degrees of facility with which capital can be transferred from one mode of employment to another, has an important effect on the rate of profits in different trades and in different countries. Supposing all the other causes which influence the rate of profit at any period, to act equally on capital employed in different occupations, yet the real rates of profit would soon alter, on account of the different degrees of loss incurred by removing the capital from one mode of investment to another, or of any variation in the action of those causes. 450. This principle will appear more clearly by taking an example. Let two capitalists have embarked L10,000 each, in two trades: A in supplying a district with water, by means of a steam-engine and iron pipes; B in manufacturing bobbin net. The capital of A will be expended in building a house and erecting a steam-engine, which costs, we shall suppose, L3000; and in laying down iron pipes to supply his customers, costing L7000. The greatest part of this latter expense is payment for labour, and if the pipes were to be taken up, the damage arising from that operation would render them of little value, except as old metal; whilst the expense of their removal would be considerable. Let us, therefore, suppose, that if A were obliged to give up his trade, he could realize only L4000 by the sale of his stock. Let us suppose again that B, by the sale of his bobbin net factory and machinery, could realize L8000 and let the usual profit on the capital employed by each party be the same, say 20 per cent: then we have Capital invested; Money which would arise from sale of machinery; Annual rate of profit per cent; Income L L L L Water works 10,000 4000 20 2000 Bobbin net Factory 10,000 8000 20 2000 Now, if, from competition, or any other cause, the rate of profit arising from water-works should fall to 20 per cent, that circumstance would not cause a transfer of capital from the water-works to bobbin net making; because the reduced income from the water-works, L1000 per annum, would still be greater than that produced by investing L4000, (the whole sum arising from the sale of the materials of the water-works), in a bobbin net factory, which sum, at 20 per cent, would yield only L800 per annum. In fact, the rate of profit, arising from the water-works, must fall to less than 8 per cent before the proprietor could increase his income by removing his capital into the bobbin net trade.