This suggests that a distinction ought to be drawn between _nominal_ and _real_ wages. Wages, of course, are not an end in themselves; they are merely a means which enables the worker to satisfy his wants. The real utility of wages depends, therefore, upon what they will purchase, and this, again, depends upon the general level of prices. Even if wages, reckoned in dollars, go up fifty per cent, the worker is no better off if the general level of prices also goes up fifty per cent. A worker’s nominal wages are what he receives in dollars; his real wages are reckoned in terms of purchasing-power. The rate of wages should always be studied, therefore, in connection with prices. An increase or decrease in nominal wages may mean much or it may mean very little. [Sidenote: The minimum wage level.] There is a limit below which real wages cannot fall. This is the point at which the worker can manage to maintain himself and his family. Just where this point is, stated in terms of money, no one can say. It varies in different parts of the country. Before the World War the statistics showed that half the adult male workers in this country were earning less than six hundred dollars a year, yet the standard of living among American workmen was higher than that of the workers in any other country. Today it is probable that these same workers are earning more than a thousand dollars. This does not mean, necessarily, that the standard of living has risen, for the amount of nominal wages needed to maintain the pre-war standard is greater because of the rise in prices. [Sidenote: How capital arose.] =Capital.=—Capital is the third factor in production. In primitive industry the application of labor to natural resources produced direct and almost immediate results. The savages who gathered nuts and caught fish with their hands, for example, gained the fruits of their efforts at once. But these direct methods of satisfying their wants did not carry mankind very far. It soon became apparent that men could produce economic goods more easily and more abundantly by indirect methods, that is by the use of tools, implements, machinery, and other labor-saving devices. These made possible the utilization of minerals and other natural resources which could never have been made to serve the wants of man without using the appliances of indirect production. So, as civilization developed, production came to be spread over a considerable period of time, until today it often happens that a whole year intervenes between the first step in production and the sale of the finished article. Consider the articles of daily use, clothes, shoes, furniture, books, and realize how vast has been the series of operations necessary to produce each of them! Many workers have contributed their share, and each of these has had to receive his wages long before the goods passed into the hands of the ultimate consumer. [Sidenote: What it includes.]