ART OF EOONOMIO DEVELOPMEN2 ?5 one. There is thus a gradual transfer of the capital fund from one form of instrument to another. In most /ndustries, however, this takes place in an involuntary manner. The decline of the demand for the ?oo?s produced means a lower price and a revenue so much reduced that the owner of-the capital can find no margin beyond meeting his ordinary expenses. He consequently uses up his capital fund, whitst other persons to whose services the public demand has transferred itself are makin? big profits h'om which they can save and accumulate a new capital fund. The original owners lose their capital, but the total social capital is not reduced. ? 5. Loss of Interest during on?tru?.--Attention must be drawn to a well-known economic fact, which however is enterprizes, namely from capital lying often overlooked by the loss of idle promoters of large interesl which arises in partly finished works during the period of construction. Taken at compound interest this may mount up to a much larger stun than might be anticipated; and it may well be that a mdre expensive m?thod oi construction which would complete the work in a much shorter time would be cheaper in the end. If definite eslimates are available. as to the cost of completing the work within different periods, it is possible easily to be the cheaper in the long run. calculate which will The rate oi interest to be used in the calculation is the estimated net rate of return on the capital invested after the u?dertaldng has reached maturity in its working, {.e., ten, fifteen or twenty years after the commencement of operations. Two distinct classes of cases may be recognized, which, however, shade into one another in practice. The ?rst class includes cases where only the capital I The main? and transferenoe of the to?l fund of social esp?! is very lueidly ex?ned by J. B. Clark in his Dbfrib?r?o,t o! W?tfa (Msemillan Co., U.8.A, Chaps. IX, X &nd XVHI). The reader should slso refer to Irvin8 l, hher. N? of Capital a, ut l, wo,n?. 4
