?I?T OF EOONOMIO DEVELOPMENT 88 i?. A manufacturer, e.g., considers what will be the value of the extra weekly output obtained by employing an additional workman, either with his existing machi- nery, or assuming an additional machine installed, in which case he must deduct the interest and depreeis- tion on output of employing manufacturer, if him. Exactly the merit of capital. the machine. If the value of of the workman is greater him, which is mainly he the weekly than the his wages, knows his cost the business, will employ same principle applies in the invest. For example, a railway company has a large body of capital invested in its permanent way and rolling stock. Any additional capital expenditure is marginal as regards the undertaking as a whole. The advantage from the additional capital may arise either in reducing working expenditure, as in putting in a new siding, or in attracting additional traffic to the main line, as in putting on new well-furnished passenger coaches, or in building a branch line. Or again, an irrigation canal may have had its distributaries badly aligned and it may be shown that there would be economy, both in the pay of the staff and in saving wastage o! water, by closing existing distributaries and making new ones. The saving might be estimated to amount to 10 per cent per annum upon the additional capital outlay required. This is the measure of the marginal productivity of capital in regard to this parti- cular canal, and, if capital can be borrowed at four or five per cent, there will be a considerable profit f?om o? a making the improvement. revenue-yielding character In every public work capital has a certain marginal productivity. Hence it should not be assumed, because investigation may have showr? a few years ago that no more capital could be profitably expended, that that verdict still holds good. Re-investigation
